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HMRC form gaffe leads to agent account suspension

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A misplaced anti-money laundering form at HMRC headquarters led to an accounting firm’s agent access being struck off, losing a month’s worth of work and almost going out of business.

30th May 2024
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A sole practitioner was locked out of their agent services account for a month after an anti-money laundering form went astray at HMRC, losing his firm an estimated £15,000 worth of business and almost causing the firm to go under in the process.

Initially offered £150, the practitioner embarked on a 12-month fight for compensation involving their MP and an independent adjudicator, only to be informed there was no avenue for redress.

The story forms part of a wider pattern of agent account suspensions, leaving practitioners unable to perform many day-to-day tasks essential to their work. During April 2024 alone, five AccountingWEB members posted about their issues, with one firm owner telling their story about being left in the cold.

The chartered accountant and sole practitioner agreed to share their story on condition of anonymity.

Misplaced form leads to agent lock-out

“I set up my firm five years ago and it grew during Covid. From the start, I’ve been supervised for money laundering by ICAEW. The only interaction I have with HMRC is as an agent.

“In September 2021, I received a request status from HMRC asking who is supervising me for money laundering. I returned the AML 103 form in the post as requested to HMRC in October 2021.

“Unfortunately, it landed at HMRC and went into the wrong workflow. It later transpired that the person who received it took 53 days to get through their workload, get to my form and realise it had nothing to do with them, at which point they gave it back to the main switchboard. 

“In the meantime, I was struck off as a non-responder. This resulted in my agent status being removed, along with my ability to submit corporation tax and self assessment returns, which make up the bulk of my work. This was on 2 Dec 2021, at my firm’s busiest time.

“With no agent services login, I lost the ability to trade – it was awful. I tried calling, writing and emailing but just couldn’t get an answer.

“The ‘agent maintainer’ team is apparently responsible for this, but they don’t accept emails or phone calls. There’s no follow-up, you can’t speak to this team – it’s an almost mythical department. They have a ‘service level agreement’ to respond to letters within 40 days, but that’s no good when I can’t run my business.

“Because I’ve previously worked on committees for ICAEW, I was fortunate to know the right people to call at the Institute. After a bit of back and forth, they had someone literally walk the corridors of HMRC to find this team and ask them. Without this, they’d have been completely unaccountable. 

“My agent service access was restored to me on 27 December when HMRC sent through codes – this was later than it might have been because of the Christmas post. Even then, all my clients weren’t allocated to me and I had to manually add the unallocated ones during the holidays and wait for the overnight refresh. 

“I lost a whole month's business, around £15,000. It had a catastrophic impact on my firm, which was in its infancy and could have gone under. As it was, I had a terrible January with a whole pile of work and a massive cashflow hole – with all the costs of December with no income. I spent the next six to eight months just recovering.  

“Naturally, I complained and got my MP involved. By March 2022, HMRC accepted my complaint and offered me £150 compensation. This was not at all acceptable and they said I had the right to approach the adjudicator’s office to make an independent complaint.

“The adjudicator’s office came back and said they do not have jurisdiction because I’m technically not a taxpayer – in this instance, I’m treated as a service provider. The best they said they could do was to attempt to launch a Parliamentary inquiry – that’s obviously not what I was looking for.

“I completely accept that it’s a process gone wrong, not someone at HMRC who hates me. But it’s their process and nobody dealt with it. If the ICAEW hadn’t got behind this, who knows where I’d be?

“My case was very clearly an internal gaffe, which HMRC admitted, but they were still unwilling to do anything or take responsibility. Agents don’t get a right of appeal when something like this happens, there’s no higher body. 

“HMRC also needs to come to the realisation that accountants in practice are not the enemy.”

*30 May 2024: The headline for this article was changed to correct the spelling of the term 'gaffe'. What a word to get wrong eh?

Replies (67)

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Replying to Martin B:
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By paulwakefield1
30th May 2024 12:19

Spherical objects

Thanks (2)
Intercity
By Mr Hankey
30th May 2024 10:32

Wow, what a ghastly story, I really feel for the accountant.

I received the dreaded letter from HMRC requesting AML supervision documents. Mainly thanks to reading the stories on the Aweb forum, I knew it needed to be treated with the upmost attention. The letter arrived in the post in the morning, and by that afternoon I was at the Post Office counter, posting everything back by special delivery.

It must have gone through ok- that was on 05 December 2022 and everything is still fine with my agent account. I was really worried at the time though and thank my lucky stars nothing went wrong.

Thanks (2)
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By Swimmingagainstthe Tide
30th May 2024 11:01

Would it not be possible to sue for negligence? It feels awfully like HMRC have a duty of care and there were very obvious causal damages. Just a thought.

Thanks (4)
Replying to BSSRoberts:
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By Joe Alderson
30th May 2024 16:41

HMRC has a degree of sovereign immunity, which makes it difficult for anyone to sue them. There may be limited and specific conditions that would allow them to be sued, but this isn't likely to be one of those situations. They are virtually untouchable.

Thanks (1)
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By ArianBloodwood
30th May 2024 11:04

"Improving standards in the tax advice market" - one of the key players in that market is the tax collector/administrator itself. No-one's talking about a market regulator which also regulates HMRC. Plugging only some of the holes in the bucket won't mean it holds water.

Thanks (8)
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By Rgab1947
30th May 2024 11:10

What I cannot understand why banks can do everything online, securely, even with several bank accounts, credit cards etc.

I can jump between accounts, make correctios, update and I can give another person access. Biometric sign ins. You all know how it works.

Rarely a glitch.

So why can't HMRC get it digitally right? Oh like the Post Office.

The UK is broken and there is no will to fix it.

Thanks (4)
Replying to Rgab1947:
Rob Swan
By Rob Swan
30th May 2024 12:43

Banks' IT and programming/systems are among the best. Banks these days are (approx.) 100% IT so they know not to cut corners. HMRC, on the other hand....

Thanks (4)
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By cbp99
30th May 2024 11:18

I had always assumed that those regulated for AML by one of the CCAB bodies did not need to worry about HMRC interfering. Indeed, one of the reasons for maintaining membership is to avoid being regulated for AML by HMRC.

But the solution is surely simple – HMRC requests a list of those members in practice who are under the AML supervision of the regulating body, ticks them off on its own list of agents, and then focusses on the rest of the agent population.

What am I missing?

Thanks (4)
Replying to cbp99:
Rob Swan
By Rob Swan
30th May 2024 12:41

What are you missing?
MTD for AML I shouldn't wonder ;) Probably another £150M and indefinite postponement to boot!

Am I a touch too cynical?

Thanks (0)
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By Justin Bryant
30th May 2024 15:13

Meanwhile another Government department can't even detect a £100m benefits fraudster (apparently it was only spotted by the Bulgarian police) and just look at the paltry sentences!
https://www.bbc.co.uk/news/articles/cn330zkvnmyo
https://www.dailymail.co.uk/news/article-13470893/Bulgaria-fraud-Britain...

This country succeeds (just about) despite the Civil Service, not because of it.

Thanks (3)
Replying to Justin Bryant:
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By johnjenkins
30th May 2024 15:34

Perhaps it not as easy for fraudsters to get a bank account in Bulgaria as it is here.

Thanks (2)
Replying to Justin Bryant:
Rob Swan
By Rob Swan
30th May 2024 16:39

8 Yr. sentence = (approx) £3M/Yr. Laughable :(

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Replying to Rob Swan:
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By FactChecker
31st May 2024 00:38

8 Yr. sentence = 4 Yrs inside = (approx) £6M/Yr!
And that was only 25% of the gang's proceeds ...

Thanks (3)
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By peter morgan
31st May 2024 00:34

Not on the same scale as the Post Office scandal but similar issues. Crap systems, incompetence in senior roles and the small guy getting hammered. At an individual level - It IS on the same scale as the Post Office scandal. These repeated catastrophic errors by HMRC need to be addressed, there needs to be recourse for agents and people need to get fired. Where are the Professional bodies following through?

Thanks (5)
7om
By Tom 7000
01st Jun 2024 17:25

I would have done the work anyway, charged clients . Waited till it was restored then sent in the lot on the day of restoration. Post 31 Jan... write a nice letter stating all that were late and why and please remove all penaties.

But hindsight is a wonderful thing ....

Thanks (1)
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By booksy
03rd Jun 2024 09:47

Man this made me cry. Their culture is to treat us with contempt as we are not part of their grand plans. Swearword.

Thanks (2)
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By Ian Narbeth
14th Jun 2024 16:15

What sort of service level agreement allows 40 days to respond to letters? Unbelievably pathetic, especially when HMRC are quick to penalise failures to file within 14 or 30 days.

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