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Agent account freezes leave firms in the cold

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Accountancy practices have reported a spate of agent account suspensions by HMRC, leaving them unable to perform many day-to-day tasks essential to their work. Why is this happening, and what actions should firms take if this happens to them?

24th Apr 2024
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“I was starting to get desperate. I tried to think of ways around it – just giving my clients away to avoid being sued felt like the cheaper option.”

This is what an AccountingWEB reader told us about their recent experience of being frozen out of their agent services account. In the past month alone, AccountingWEB members Angela S, Dressage Diva, LS Thompson, coulsonl and chris lee have all posted or commented on the Any Answers forum about being locked out of all their agent services accounts.

Without access to the online services for agents account (which covers services including self assessment, corporation tax and the construction industry scheme (CIS)), or the agent services account (which covers services such as VAT), accounting firms are left unable to perform many of the tasks that make up their day-to-day operations. This has the knock-on effect of missing potential client filing deadlines such as VAT or CIS, potentially incurring penalties (and the wrath of their clients).

The Midlands-based chartered accountant and sole practitioner quoted at the beginning of this article has agreed to share their story on condition of anonymity. They were locked out of all their HMRC accounts for two weeks in the middle of March 2024.

Agent account lock-out: A reader’s experience

“On the Monday, I received an automated email from HMRC,” the sole practitioner told AccountingWEB. “It looked like my user codes for the agent services account had been pinged for two-factor authentication. I was busy and didn’t think much of this at the time.

“On the Tuesday, both accounts were suspended and I couldn’t log in. Both passwords failed to work. I hadn’t heard anything from HMRC so I phoned online services and they said they’d ‘escalated the problem’. I followed up on Wednesday but heard nothing.

“On the Thursday, the account was still suspended, but I received a call from HMRC’s fraud team, telling me that an undetermined user had logged in and they were investigating. On that day, I also received a letter from HMRC stating that my accounts were suspended while it was investigating and would write to every client affected, but did not specify who. It also did not specify how long it would take to investigate.

“I emailed my clients to let them know an HMRC letter might be coming, with a few links to some general cybersecurity advice. I didn’t know what else to do.”

The sole practitioner followed this up with a call to online services to see if there was a timescale for the investigation. They were told the resolution time could be six weeks or up to six months.

“I was starting to get desperate,” continued the accountant. “I’d already started a spreadsheet of penalties for missed deadlines but the complaints from clients were racking up and I was having sleepless nights.”

After two weeks, the AccountingWEB reader attempted to log in and found their access had been restored, and received a letter from HMRC to that effect several days later.  

“The worst part was not knowing how long it would be off,” they added. “You can’t serve your clients if you can’t log into agent services. Everything is there. 

“It didn’t feel like there was support for accountants from HMRC. I called online services and had to wait 51 minutes. We’re trying to work together. We’re the bridge most of the time between our clients and HMRC and we can’t do our jobs. As someone on the forum pointed out – think if it happened in January!”

HMRC responds

AccountingWEB took its readers’ stories to HMRC, who issued the following response: “We take the protection of customer information very seriously and act swiftly where we detect unusual activity. Agents with suspended accounts should contact our online service helpdesk who will support them in getting back online.”

The tax authority told AccountingWEB that it monitors its systems and data continuously, and where “unusual identify activity” is detected, it may suspend agent or taxpayer accounts while it investigates to protect sensitive data.

In the case of agent accounts being frozen, all affected agents are notified by letter. This includes instructions on what they need to do next. Details of what has taken place should be included in the initial notification letter. 

Agents wishing to discuss this issue should call the online services helpdesk (OSH) on 0300 200 3600. Calls to the Agent Dedicated Line (ADL) will be referred to OSH.

HMRC stated it will work with agents to unsuspend their accounts and will contact them via telephone to provide advice on what actions they should take to protect their data.

A follow-up letter will be received if the agent’s clients have been negatively affected.

HMRC urged agents to be “extra vigilant” when clicking on links in emails and ensure anti-virus software is kept up to date.

“If the agent has any suspicion about access to their account or the loss of their login details, they can change their password quickly via the Government Gateway settings in their agent account,” concluded an HMRC spokesperson.

Member experiences

The individual story highlighted above is not an isolated case. In the past month, five AccountingWEB members have reported similar issues, with others commenting on their past experiences of being locked out of their agent services account.  

The sole practitioner’s tale shares a lot of the same features as other members, with the main grievance being the time taken to resolve the investigations. In their post, AccountingWEB reader Dressage Diva states it took 13 days, Angela S commented that her lockout issues took three weeks to resolve, while coulsonl reported that their ongoing query was six weeks and counting.

Understandably, HMRC wishes to protect the estimated 85,000 tax advisers assisting 12m taxpayers against hackers and cybercriminals. Cases involving sensitive data and remote access can also be complex and take time to fully unpick. 

However, equivalent private-sector tools allow account and password resets to be completed within a matter of minutes while investigations continue in the background. Being locked out of agent services for up to a month could potentially have a catastrophic impact on an accounting firm’s operations.

The AccountingWEB reader featured above is also frustrated that they have yet to ascertain a clear reason for why or how it happened, or which of their clients (if any) were impacted and contacted by HMRC.

On an Any Answers thread, one member shared that their firm had been locked out due to an anti-money laundering issue. “Do you have HMRC as your money laundering supervisor?” wrote JSA Mark. “If so, are you up to date/renewed with them? I worked for a firm that was late with the renewal and everything got suspended until it was solved. We lost about four weeks of being able to file, and the person who forgot to renew was heavily disciplined.”

AccountingWEB reader I’msorryIhaven’taclue stated that many of the factors listed in the reports were consistent with a data protection breach with the accountant’s HMRC login. They recommended reading the Information Commissioner’s Office’s guidance on notifiable breaches and calling the data watchdog’s helpline on 0303 123 1113.

Replies (21)

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By FactChecker
24th Apr 2024 20:09

Terrifying (the impact) ... and horrendous (the HMRC 'response').

As far as I can see there no answer to the 1st question in your heading .. "Why is this happening?"
The dearth of an answer is of course not your fault, but frustratingly consistent with HMRC's attitude to it's 'customers':

* On the 4th day "received a letter from HMRC stating that my accounts were suspended" ... given how slow HMRC are to print letters and how unreliable RM are at delivering them that's probably a recent record. But a week feels like infinity when your world is imploding around you AND the letter contained nothing useful (reason / duration / remedies / workarounds / ...)!

* On following that up with a call to online services (to see if there was a timescale for the investigation) was "told the resolution time could be six weeks or up to six months"!
In what world is that considered to be either helpful or remotely useful - it's just a lawyer-approved statement to cover HMRC's posterior (and demonstrates the low opinion they have of Agents).

* The tax authority told AccountingWEB that it monitors its systems and data continuously, and where “unusual identify activity” is detected, it may suspend agent or taxpayer accounts while it investigates to protect sensitive data.
They're learning (excuses not efficiency or competence).

That's almost word for word what Barclaycard say whenever (typically about once every 3-4 years but always at a very inconvenient time) they 'freeze' your card without warning - and, so far in my experience, without logical reason.
The most recent time, a couple of years ago and that I escalated up to Director level, was because "you haven't paid that person/business in the last 5 years so that flags as an unusual activity".
Who was I paying? HMRC (and the princely sum of under £150)!
But wasting my time (hanging on the phone for hours), embarrassing me (because I only found out when trying to pay for a friend's dinner) and generally just being ar$eholes because they've got the power to do what they like ... that of course is A-OK (and is being done 'to protect me'). D'ya think?

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Replying to FactChecker:
Tom Herbert
By Tom Herbert
24th Apr 2024 20:51

It's a fair point that we don't know why it's happening. I attempted to provide a few answers in the final section (potential login breach, AML supervisor issues) but the HMRC follow-up letters I've seen have been quite vague.

Thanks (3)
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By Refs1
24th Apr 2024 22:52

Happen to my company. Let’s say I went to HMRC in an aggressive manner. To be fair they sorted it quickly once I expressed my opinion forcefully. It was very challenging and frustrating at the time.

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By Chris.Smith
25th Apr 2024 10:08

If that happened to one of my firms, I would demand HMRC provide alternative arrangements to file clients returns.

If not then the penalties / interest would stack up, and who becomes liable for those in these scenario's?

AML renewal issue of your own doing, certainly the firm.
A rouge scammer, nobody you can find... insurance company claim.
HMRC error, HMRC.

Never the clients fault, yet the resulting penalty would diminish the client goodwill immensely.

Given HMRC probably won't know the position or elaborate, I would push them for a loss of business.
Their official response is dreadful it doesn't help anyone, it just blames the victim!

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By andrew laird
25th Apr 2024 10:20

Happened to my firm, in March this year.

Appreciate the need to call HMRC, the number that is on the letter they send out, mentioned in article, but they are unable to help, i called everyday after i realised i was locked out, all they told me that i would be contacted by the fraud dept, they seemly don't have a phone in their office!
After specifically asking for a call back from them ( on my mobile) and then following that up everyday, they called 72hrs later, to my office landline, left a message to say they had called!!

Eventually when i called again ( the following day) i was advised that my account had been unlocked and another letter would follow, that letter hasn't arrived, and none of my client have been contacted re this "breach"

We need more communication from HMRC when this happens, it was a hugely worrying time, i was lucky and only had to deal with two penalties on late submission, but on the run up to the 05.04 my Payroll dept was panicking as they advised in one of my calls that it could take 6 weeks to respond. But was unable to provide overviews etc.

Thanks (6)
Replying to andrew laird:
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By Dressage Diva
25th Apr 2024 11:18

Still waiting for my second letter too. It seems no clients have been contacted either. I phoned On-line services everyday to be told the same, no more information, would escalate my call & didn't know about the initial fraud letter. Shocking service.

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By gillsoffice
25th Apr 2024 10:33

It seems more and more organisations are doing this, locking us out of their systems they have demanded we use, causing embarrassment, disruption to our work and providing no alternative but to wait, often for weeks, while they conduct their 'checks'.

I have been locked out of a bank account for over a week for a 'high street' (I wish!) bank to conduct an ID check. I supplied the info (copy driving lic and that silly 'liveness' check) on the day they asked for it. Phoned the day before yesterday - the info I supplied is validated, but they need to finalise the process, with no time frame on when the department dealing with it will return my access. This delay is unacceptable and even more frustrating because you can never contact the department directly or get an indication of when the torment will be over.

Everything should be so much more efficient in this day and age, but we seem to be going backwards!

Thanks (6)
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By agknight
25th Apr 2024 10:35

What are our accountancy bodies doing to gain some kind of workable procedure and protection for us? Probably too busy on theire diversity and sustainability policies.

Thanks (15)
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By 0098087
25th Apr 2024 10:47

We had two CIS clients from our CIS client list. We put in a formal complaint and it got sorted. HMRC have no idea why!

Thanks (1)
Replying to 0098087:
By mydoghasfleas
25th Apr 2024 13:32

Presume this is construction industry scheme reference, not a gender recognition issue in HMRC

Thanks (2)
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By 0098087
25th Apr 2024 10:48

with the potential cuts to jobs to come, whoever wins the election, HMRC systems are not fit for purpose. MGD will be a disaster. I really don't know if I want to carry on.

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VAT
By Jason Croke
25th Apr 2024 10:55

Doesn't surprise that HMRC have zero respect for tax agents, I am sure HMRC see all tax agents as thieves and crooks who exist solely to defraud and steal from HMRC on behalf of clients.

I tend to look at this like a bank. Things do happen, people try to hack your bank account whether it is a dodgy email link or stealing your phone/laptop and banks are quite right to lock your account to prevent financial loss for themselves or their customers.

But then there is a process whereby the bank calls you or sends a message, you are then invited to speak and pass security tests, establish the facts and then access is granted within a couple of hours. I've lost a credit card before, go online to bank, click a "cancel" button, and a new card issued within a few days. Annoying but simple to resolve.

HMRCs approach is to not put any resource into this, make it as difficult as possible to contact them, not commit to any sort of reasonable turnaround time and basically not interested.

Point is, the technology exists, the processes for reporting fraudulent activity is well known and common across banking, financial and insurance services, nothing new here and yet HMRC, the department who are spearheading the digital revolution are stuck with sending letters out 2nd class in the post!

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DougScott
By Dougscott
25th Apr 2024 11:18

HMRC online services are a total joke. Their main purpose from my experience is to pass the buck among themselves but no one actually deals with the issue.

HMRC need to treat their customers and agents as if they matter and their so-called boss needs sacking.

Thanks (11)
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By johnjenkins
25th Apr 2024 11:31

Just wait till AI starts stopping accounts etc.

Thanks (1)
By Nick Graves
25th Apr 2024 13:06

The neurotic builds castles in the sky, HMRC lives in them and the psychiatrist draws the rent.

Or something...

Can one envisage all the technical vulnerabilities when we are forced into MTD, CBDCs, etc?

If it can go wrong, it will and if it cannot, it'll have a damned good try at going wrong anyway...

We're doomed, Captain Mainwaring, doomed...

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By rmillaree
30th Apr 2024 09:51

why can hmrc not see that a phonecall in advance as courtesey before they switch of the tap is tyhe minimum they should be doing - and give the business a chance to say their piece and for that to be taken seriously - ie throw hmrc officers under then bus if they are doing something they should not be doing.

horrendous all round

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By Marlinman
30th Apr 2024 11:01

What do they mean by unusual activity? My bank often blocks my card because I travel overseas a lot so always carry cash. I've not had this nightmare with HMRC yet, but never leave jobs until the last minute, prefering to get them done asap so at least I would have a decent safety margin.

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By Gone Sailing
30th Apr 2024 17:11

There is a basic principle that HMRC have missed in its entirety, it is this:

Agents save HMRC time.

Thanks (1)
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By carnmores
01st May 2024 14:13

well it happened to me yesterday it's appalling and galling. I got thru to a nice guy who took down all my details save for my inside leg measurement and has forwarded thhem to the cyber security team. I have been told to wait for a call from a withheld number. its shameful. if all the helplines had been cut off I would have been completely stuck. I am now going to try submitting thru 3rd party software for SA , CT, PAYE & VAT

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Replying to carnmores:
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By rmillaree
01st May 2024 14:28

it would be highly useful for us to have some sort of idea what issues are causing hmrc to take action here ?

Is it possible they are taking action based on such minor issues they should not be over reacting to or perpahs handling in mnore approrpiate manner

why on earth are the accounting bodies not all over this protecting members interests?

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Replying to rmillaree:
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By carnmores
01st May 2024 16:00

Quite agree its devastating not knowing why, not being given a time frame for restoration and totally unnecessary.
I have filed a vat return using 3rd party software as it relies on clients gateway but no luck with SA returns etc. i will continue to try and bypass the online system for agents.

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