Bolster AML protocols or face suspension, IFA warns

Accountants risk having their tax agent codes rescinded by HMRC if they fail to provide up-to-date documentation regarding anti-money laundering legislation (AML), the Institute for Financial Accountants (IFA) has warned.

The alert comes as a number of agents were suspended by HMRC in December for failure to provide evidence of the appropriate AML supervisions.

Due to the scale of money-laundering activity in the UK, HMRC asserts that it reserves the right to do this without further warning.

According to IFA CEO John Edwards, this could be “disastrous” for accountants as key tax deadlines loom.

“We have been made aware that some members have had their tax agent codes suspended every though they have supervision with the IFA.

“This means that firms have been unable to file any returns on behalf of their clients until the codes have been re-instated, which can take five working days or more.”

According to HMRC, businesses in the financial sector must register with an anti-money laundering scheme. This includes financial and credit businesses, legal professionals, accountants, and estate agents.

Its guidance also states that each business must register with the relevant supervisor or industry body and that it is an offence to continue business activity without completing this process.

Moreover, tax agents must now submit documentary evidence as proof of supervision. Accountants have been made aware of this via a letter from HMRC, asking them to complete and return a form with details of their firm and supervisor.

They must also provide evidence that they are a member of an approved professional body and that their membership includes AML supervision.

“If you receive a letter from HMRC, do not ignore it. Make sure that you return the completed form along with the required information to the address provided immediately,” warned Edwards.

“Having tax codes suspended can be hugely frustrating at the best of times, but now with tax season in full swing, it could be disastrous for your firm and your clients.”

Edwards goes on to note that, even though IFA membership constitutes the level of supervision required by HMRC, it is unable to provide evidence of this on behalf of the accountant.

“HMRC is immediately revoking tax agent codes due to the high risk of money laundering crimes, so it is essential you act immediately.”

According to the National Crime Agency, the scale of money laundering impacting the UK annually is in the hundreds of billions of pounds.