THE MANNER in which HM Revenue & Customs relates to tax agents and advisors is becoming increasingly vital to the proper functioning of the Exchequer.
Why do I say that? The reasons are not hard to deduce. First of all we see the bewildering complexity of the UK tax system, which has grown to such an extent that the government has felt obliged to establish an Office of Tax Simplification. Short of giving up the day job and moving full-time into the tax profession, an individual taxpayer cannot hope to feel confident in their ability to master the tax system.
Yet master it they must, for the system is essentially one of self-assessment, with harsh penalties for error. In years gone by, the taxpayer might have felt able to seek assistance from HMRC itself, yet a number of factors have meant that the department is increasingly unable to help the taxpayer. The closure of local offices; moves towards a process-based departmental structure; the relegation of direct taxpayer support to call centres; the concentration of resources into “compliance” functions; and excessive reliance on unproven and frequently incapable IT systems … I could go on but these will suffice to illustrate the department’s problems.
There is, therefore, a deep structural need for intermediaries: skilled and experienced tax agents and advisors to step into the breach between confused taxpayers and a struggling Revenue. The political will seems to be there for a more sensible and productive relationship between the Treasury and the agent community. It has become obvious to ministers that hastily produced legislation that has not been adequately tested against the expertise of the profession is not the way to proceed.
The proposed more collaborative and consultative process for making tax legislation is to be welcomed. What of the administrative will? HMRC is aware that, in the face of its own stretched resources, the agent community is its last best hope of keeping the UK tax system on the rails. It too seeks to engage with the profession.
“HMRC needs to accept that the overwhelming majority of tax agents are skilled, dedicated and committed to ensuring their clients pay the correct amount of tax”
Yet old habits and reflexes die hard: the Revenue’s obsession with controlling agents – and punishing what it sees as bad agents – risks nullifying all the good that can come from a closer, more adult rapprochement between HMRC and tax agents.
HMRC needs to accept that the overwhelming majority of tax agents are skilled, dedicated and committed to ensuring their clients pay the correct amount of tax, which is as true of those with no formal affiliations as it is of those belonging to professional bodies.
HMRC should also acknowledge that the existence of those professional bodies, with their well-developed ethical codes and disciplinary processes (such as the Taxation Disciplinary Board, which oversees members of my own body), offers yet stronger incentive to trust the tax profession.
There are, no-one could deny, a small number of tax agents whose technical abilities are inadequate, as well as a very few whose ethics fall below acceptable levels.
These are very much the exception, not the rule, and HMRC is unwise when (as it did last year with its ill-judged draft legislation on “deliberate wrongdoing”) it implies that its preferred mode of “interaction with tax agents” is the punishment of what it perceives as bad ones.
If tax professionals cannot trust the Revenue and so cannot support it, the department as currently resourced will, sooner or later, fail. And if it does, so will our profession’s livelihood.
Someone (I cannot quite recall who) said “we are all in this together”; that message must be understood and pursued by HMRC and the agent community.
Andrew Meeson was appointed President of the Association of Taxation Technicians on 7 July
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