Nichola Ross Martin offers a summary of the main tax bodies’ responses to HMRC’s consultation document.
The main tax bodies seem distinctly unimpressed with HMRC’s proposals to create new powers to deal with tax agents, as set out in its consultation document, Working With Tax Agents (WWTA).
Rather than creating new powers or systems for regulating tax agents, the ICAEW considers that there is considerable scope for making better use of existing frameworks. It points out that professional bodies are self-regulating and HMRC should be working with them.
It also notes that there is already legislation to deal with tax agents, detailed in Section 20 of the 2005 Commissioners of Revenue and Customs Act 2005 (CRCA 2005). However, it is tightly drafted and needs to be changed to allow for more informal channels of communication.
There is no need for a new tax agent registration regime, according to the ICAEW, and if any new rules were to be contemplated covering agents then it would be essential to balance these with adequate safeguards.
The body’s view on unqualified agents is that HMRC needs to determine whether unqualified tax agents as a class present particular risk problems. If they do, then HMRC needs to make arrangements for their supervision appropriate to their risk profile.
Evidence of the problem The CIOT has had more responses to this consultation document from members than any before. It too shares the concern that more regulation is just going to create unnecessary burdens, and any changes must pass ‘the public interest test’.
Significantly, it notes that the WWTA consultation document does not include statistics covering the problems that HMRC sees. It urges HMRC to share the relevant evidence, as in its members’ opinion: “The tax base is far more at risk from evasion than from either errors or aggressive tax planning”.
It also notes that the WWTA Impact Assessment, which accompanies the consultation document, does not make it easy to see how it ‘represents a reasonable view of the likely costs, benefits and impact of the leading options’.
Offshore risk Law firm McGrigors has come up with an alternative solution for agents if HMRC decides to get too heavy. Partner James Bullock is quoted in Taxation magazine as saying: “It is one thing to penalise advisers who are consistently careless or who facilitate tax evasion, but HMRC already has the tools to deal with that non-compliance and could probably use the tools it already has more forcefully, rather than continuously seeking new powers as it seems to be doing”.
He continues: “If HMRC makes life too restrictive for UK based agents and accountants, some may relocate overseas, thereby creating a ready market in offshore tax advice for UK resident taxpayers. This is the very thing that [the department] wishes to avoid”.