HMRC updates the standard for agents

Agent standards
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The standards HMRC expects from tax agents have been updated to reinforce the Revenue’s stance against aggressive tax planning and money laundering, targeting especially those not regulated by a professional body.

Released on the 4 January, HMRC’s Standard for Agents echoes the revised Professional Conduct in Relation to Taxation (PCRT) which came into effect on 1 March 2017. 

The Standard for Agents explains that agents should act “lawfully” and with “integrity” and that any tax planning should be based on “realistic facts and a credible view of the law”.

HMRC expects agents to advise clients where there is “a material uncertainty in the law” and as such, the risks and costs associated with any resultant court cases pursued by HMRC should be communicated to clients.

Targeting unrepresented agents

All members of the seven professional bodies (AAT, ATT, ACCA, CIOT, ICAEW, ICAS and STEP) are expected to abide by the PCRT, which has 55 pages of advice and guidance on all aspects of tax-related work.

Since around 70% of agents are represented by a professional body, the HMRC standard for tax agents is aimed at sweeping up those agents who are not represented by a professional body, so HMRC can establish a common standard for all agents.

HMRC also outlines the professional competence expected from tax agents – such as maintaining up-to-date knowledge and preventing errors in their client’s tax claims – and professional behaviour (dealing courteously and professionally with HMRC staff and clear terms of engagement with their clients).

The document also reinforces the importance of accountants adhering to the money laundering regulations and what that means in relation to their work with tax.

PCRT-lite

The latest standard incorporates the three of the five PCRT principles of integrity, professional competence and due care and professional behaviour. HMRC said these principles are “essential to the relationship” it has with agents.

The PCRT principles not incorporated into the updated HMRC standard for agents are objectivity and confidentiality. HMRC said these principles are essential in the client-agent relationship and that is the role of professional bodies to regulate, not HMRC.

“Not all agents are signed up to the PCRT, so HMRC very sensibly thought we should have something,” said ICPA’s chairman Tony Margaritelli, who has been involved in the Agent Strategy group’s discussions about the standards for agents.

But unlike the substantial PCRT, the comparatively paper-thin HMRC document still leaves what constitutes as aggressive tax planning as a grey area and open to interpretation. “HMRC just says agents must not create, encourage or promote tax planning that is contrary to the clear intention of parliament on it,” said Margaritelli.

“I understand what they are trying to get at, but it is very difficult when you have to put these things into words. I think they've put together something small and simple and leaves it open to interpretation - both ways.”

The profession reacts

The ICAEW Tax Faculty also welcomed HMRC’s “PCRT lite” standards because it shows HMRC is taking an “active interest in the performance of agents who are not members of a professional body”.

Furthermore, the Tax Faculty said the updated standard makes it clear that unrepresented agents “should not undertake aggressive tax planning of the type that does not meet the test set out in the PCRT”.

Elsewhere, Margaritelli was pleased HMRC referenced the taxpayer’s charter and what agents can expect from HMRC at the beginning of the document: “My view is: read the standards for agents, then read the taxpayer's charter and you've got both sides.

“If HMRC is going to hold us to some sort of level against this standard, we've got to be careful that we equally hold them to the same level where the taxpayer's charter is concerned.”

About Richard Hattersley

Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

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16th Jan 2018 12:03

How about us agents demanding a code of conduct of standards with HMRC, such as dealing with post within 60 days, answering the telephone in under 45 minutes, having competent staff to liaise with and being able to talk to dedicated specialist departments directly?

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18th Jan 2018 14:53

Standards for aggressive tax planning , money laundering ?
Hooray ; where the hell have HMRC been hiding for the last 5 decades. Good to see someone with a bit of [***] concentrating on the areas they should be getting to grips with.
However the successive incumbents in power having bastardised the Revenue service in virtually every other department , don't even whisper the words 'relationship' and 'standards' to me about any other area.

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30th Jan 2018 03:18

My concern is " the turn a blind eye syndrome ' .
In the late 1980s a well known recruitment agency sent me for an interview at a business based in a very large city. I was successful and attained the post .
The business was engaged in importing with a turnover of £8.000.000. And it was a 6 man family partnership assessable to schedule D case 1 income tax.
Immediately I created a double entry bookkeeping system and really felt proud to be putting the business records on a proper footing. I was quite shocked that the acting tax agents -a two man partnership Chartered accountants had been happy to accept the status quo of crude records. I discovered that the stock figure in the accounts was understated by £1 million plus and that at the year end the unpaid purchases /imports for resale were a guess at £350.000. Imports were not being ' purchase day booked as goods arrived into the warehouse.
By week 3 of my attendance I discerned that the precedent acting partner was ' dipping in the till' and over 5 years ' the till dipping ' in aggregation was £1 million. Every 3 months he would go to the safe and put £60.000 in a carrier bag and take it home with him. He would then raise documents to cover the fraud as a legitimate expense.
Not only was he depriving Inland revenue of £80.000 income tax a year ( 40/100 × 200.000) he was purloining from his fellow family partners.
In 1997 at Crown Court I attended as number one witness for the prosecution brought by HMIT and myself ( I had notified the Special Compliance Team) The precedent acting partner was jailed for 18 months and ordered to pay over.£400.000 plus interest . ( 40/100 × 1.000.000)
Surely the acting tax accountants should not have allowed this fraud in the figures submitted. The accountancy fee was £5000.
For my services HMIT sent me a big five figure cheque. The head special compliance guy - tax inspector was promoted.
The tax payers business partnership came to cessation and the big warehouse was sold to discharge the court imposed tax bill.

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30th Jan 2018 03:36

I am King Edward V1 Grammar school educated ( classics ) with BSc honours in political sciences and criminology. My interests : politics. American Cocker spaniels. Foreign travel. Playing guitar (1969 fender stratocaster )
MY political stance is slightly left of centre - social democracy. Sadly I have witnessed so much dishonesty within business and capitalism letting us all down.
The Tory retrenchment of the welfare state has thrown us into crisis.
Wholesale revision is needed - public and private enterprise with more scrutiny on capitalism. There is no alternative.

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avatar
30th Jan 2018 04:04

My concern is " the turn a blind eye syndrome ' .
In the late 1980s a well known recruitment agency sent me for an interview at a business based in a very large city. I was successful and attained the post .
The business was engaged in importing with a turnover of £8.000.000. And it was a 6 man family partnership assessable to schedule D case 1 income tax.
Immediately I created a double entry bookkeeping system and really felt proud to be putting the business records on a proper footing. I was quite shocked that the acting tax agents -a two man partnership Chartered accountants had been happy to accept the status quo of crude records. I discovered that the stock figure in the accounts was understated by £1 million plus and that at the year end the unpaid purchases /imports for resale were a guess at £350.000. Imports were not being ' purchase day booked as goods arrived into the warehouse.
By week 3 of my attendance I discerned that the precedent acting partner was ' dipping in the till' and over 5 years ' the till dipping ' in aggregation was £1 million. Every 3 months he would go to the safe and put £60.000 in a carrier bag and take it home with him. He would then raise documents to cover the fraud as a legitimate expense.
Not only was he depriving Inland revenue of £80.000 income tax a year ( 40/100 × 200.000) he was purloining from his fellow family partners.
In 1997 at Crown Court I attended as number one witness for the prosecution brought by HMIT and myself ( I had notified the Special Compliance Team) the precedent acting partner was jailed for 18 months and ordered to pay over.£400.000 plus interest . ( 40/100 × 1.000.000)
Surely the acting tax accountants should not have allowed this fraud in the figures submitted. The accountancy fee was £5000.
For my services HMIT sent me a big five figure cheque. The head special compliance guy - tax inspector was promoted.
The tax payers business partnership came to cessation and the big warehouse was sold to discharge the court imposed tax bill.

Thanks (0)