HMRC tries to clarify CIS confusion

In response to feedback from agents, HMRC has posted some further guidance on CIS authorisations on its website. It says that there has not been any change in policy around the support from New CIS for agents, and the problem seems to be that the rules are just plain confusing. The new guidance is as follows:

New CIS Agent Authorisation requirements
Agents can apply to act for a CIS client to conduct business:

• in person, over the telephone or in writing by submitting a 64-8 authorisation
• on-line for which there are two key steps

1. registering and enrolling for the PAYE/CIS Online Service
2. gaining appropriate authorisations from their client

64-8 Authorisations
Agents can demonstrate they have the authority to act for a client by submitting a 64-8. Any existing authorisation (before 6 April) for SA or CT business will also apply to CIS business, unless the client specifically states that they do not wish this agent to act on their behalf for CIS.

Registration & Enrolment for the PAYE/CIS Online Service
From 6 April the PAYE Online service was changed to support both PAYE and CIS Online business. This was not because there is any direct connection between PAYE and CIS, but simply because there was an existing proven business process that New CIS could be built on.
Agents who were already registered and enrolled for the PAYE Online Service before 6 April have been automatically migrated to the new PAYE/CIS Online Service for Agents. This means that they do not need to register and enrol again.
However, any client authorisations in place for PAYE were specific to PAYE and could not be automatically carried over to CIS. This was because the original FBI2 or Online Agent Authorisation for PAYE would not have contained any client authorisation to act on CIS business.
Use of the New CIS service for verifications or access to HMRC’s free filing application will allow access to subcontractor information. This cannot be given out online without a formal authorisation in place.
However, this does mean that any agents who use third-party software to file monthly returns only will not need to notify HMRC about any client authorisation since this submission does not involve HMRC disclosing any subcontractor information (i.e. HMRC will accept file-only agents for monthly return submissions by third-party software).

Gaining client authorisation
Agents who wish to perform verifications online or wish to access the HMRC free filing application on behalf of their client will need to get their client to notify HMRC of their authorisation. A separate CIS authorisation is required to act on behalf of each client for CIS online.

This can be arranged by:

• using the Online Agent Authorisation service;
• their client authorising them at the Government Gateway (if their client is registered and enrolled for CIS);
• completing the revised FBI-2 (the revised FBI-2 is available from the HMRC website).

Editorial comment: Continuing “glitches”
Nichola Ross Martin writes: Despite the fact that implementation of the new CIS scheme was set back a year, a known defect in computer programming which has been carried over from PAYE online has still not been resolved for the launch. Some agents cannot commence the authorisation process online because of a fundamental programming problem. This defect affects the online authorisation tool and means that the system cannot cope if an employer’s reference starts with a zero.

I asked for confirmation as to when this might be resolved, and we are told that this will have been “by the summer”, but in the meantime agents must use form FBI-2 for CIS clients affected.

There has been widespread complaints by agents that there are still unacceptable delays with FBI-2 authorisations, but HMRC appears in total denial about these, a spokesman says “on the HMRC side, agent authorisations should take just a matter of days”. It is more likely to be a matter of weeks according to Accountingweb members, in fact often delays are so long that the process often has to be repeated as PINs arrive too late to be be activitated in time.

Whilst many may sympathise with HMRC over its computer problems, a programming problem that has dragged on and on hardly indicative of a quality system, and may call into question the fundamentals of its design. Delays in authorisations are a complete nightmare, but at least once they are all redone that is it, unless of course gremlins get into the system and the 64-8 goes awol. I have written about these in the Editors' blog.