THE TAXMAN’S proposals for a new registration process seem very sensible. Professional tax agents who undertake numerous tax returns and client details should not have to go through the same rigmarole every time HM Revenue & Customs requires information. As such, “self-serve” should be welcomed for potentially saving time and costs.
But the judicial review involving Christopher Lunn this year should provide a note of caution. In an unprecedented move, HMRC said it would no longer deal with the firm because of concerns over wrongdoing – despite there being no conviction. The judge said that the taxman had not allowed Christopher Lunn to make representations and therefore was not within its rights to refuse to deal with the firm.
The thrust of these proposals do not go as far as to withdraw permission for an agent to do business on behalf of their clients, which would have to be “necessary, relevant and proportionate”, they say. What they do is give certain agents the ability to provide speeded up services.
So how are these agents decided? Any proposal would give HMRC more scope to rule on how much it “trusts” individual agents – a term that is mentioned throughout the consultation.
There are indications that it will be imposing a form of quality control. In one instance, it said this new process will not replace the self-regulation role taken by the professional institutes. However, “there could be value in all tax agent firms operating in the UK being expected to meet or exceed a minimum level of competence and professional conduct”.
HMRC is also “keen to explore the scope for requiring tax agents to hold a relevant qualification to provide tax advice and complete returns and claims on behalf of their clients”. This could well be based on membership to one of the chartered institutes, which again is alluded to throughout.
In itself, this might not be a problem, even if it does give the institutes more power than some would like.
But one possible approach provides a warning – HMRC said it could limit access to self-serve for “certain types of agent or for agents below a certain size threshold” until they display security arrangements that are satisfactory.
The firms below the “certain size threshold” would face a commercial disadvantage in not being able to provide the same efficiency as their bigger neighbours. With taxpayers now having a definitive quality control to judge a firm, this could prove disastrous.
Greater efficiency should always be welcomed – as long as there is some form of protection for the smaller firms.
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