Draft legislation: Requirement for tax advisers to register with HMRC and meet minimum standards

LITRG has previously supported a requirement for agent registration and has also suggested that something like fit and proper checks be carried out on agents. The existing position means there are gaps in HMRC’s knowledge of tax advisers and their behaviour, with inevitable risks for taxpayers. While the draft legislation goes some way to addressing the issues, we have concerns about certain aspects.

This policy and draft legislation do not tackle agents who operate in a purely advisory capacity or outside of official processes, for example, by utilising their clients’ Government Gateway accounts to interact with HMRC. These agents cause LITRG serious concerns, and this policy unfortunately might encourage unscrupulous agents to adopt this approach to remain outside the rules.

We are concerned that the legislation as drafted may not cover unscrupulous / other bad actors who submit tax refund claims without the explicit knowledge and / or consent of the taxpayer. We suggest some wording in our response that may ensure such agents are caught by this legislation.

Assuming that HMRC are able to police access to their systems by non-compliant agents, taxpayers may find that their experience of dealing with HMRC is negatively affected by this policy, if their agent is suspended or indeed cannot register in the first place. Since there is a time lag before suspended agents have to notify their clients, agent suspension could prevent taxpayers from complying with their tax obligations, while being unaware of the reason for the compliance failure. We think HMRC should accept appeals from affected taxpayers on the basis of reasonable excuse.

We think HMRC should publish guidance for taxpayers that covers the purpose of agent registration – in particular that it is not an endorsement of that agent by HMRC. It must also cover what suspension means, and what taxpayers need to do if their agent is suspended.

We acknowledge HMRC concerns in relation to making their database of registered agents public. However, for the sake of transparency and accountability, we think there should be a publicly available database of registered agents that taxpayers can check.

We also endorse the comments made by the Chartered Institute of Taxation in their submission.