Agents and HMRC: working together
Philip McNeill outlines the ICAS call for balance and empowerment in HMRC, agent, and taxpayer relationships.
Tax agents are an integral and vital part of the UK tax system. They enable the system to function. The role of agents in supporting taxpayer and encouraging compliance should be recognised. Trust between agents, taxpayers and HMRC staff is essential to create good working relationships and an effective tax administration.
What has ICAS recommended?
ICAS has put forward the following recommendations:
- The taxpayer’s right to appoint an agent (under the HMRC Charter) should be supported by HMRC in practice
- Agent access needs to be properly designed and built into all new HMRC online forms and systems from the beginning
- The tax system should reflect the diversity of taxpayers and should be accessible to all members of the taxpaying community
- Agents should be able to see and do what their clients can see and do, so they can act effectively on their behalf
- Agents and taxpayers should have timely access to properly resourced helplines for routine issues and to relevant HMRC experts when required
Agents support the tax system
Tax agents are vital to the effective operation of the UK tax system; this should be properly recognised within HMRC and reflected in HMRC practice. Agents support tax compliance by helping taxpayers to get their tax affairs right; they make complex tax systems workable for businesses and individuals and reduce the risk of unexpected tax costs for all taxpayers. HMRC and agents need a good working relationship to facilitate taxpayer compliance. Trust between agents and HMRC staff needs to be maintained and developed.
The tax system should be accessible to all
The tax system should reflect the diversity of taxpayers and should be accessible to all members of the taxpaying community; in many cases this will mean access through agents, which should be properly supported by HMRC. ‘Your Charter’ states that taxpayers are entitled to appoint an agent to represent them and that HMRC will deal with an authorised agent. This should mean that agents are able to see and do what their clients can see and do, so that they can act effectively on their behalf. Agent access needs to be properly designed and built into all new online forms and systems from the beginning, not added as an afterthought.
Authorising an agent should be easy
The process for obtaining the taxpayer’s authorisation of an agent should not be too onerous and there should be alternatives to ‘digital handshakes’ for those who cannot (or do not wish to) engage digitally with HMRC. In general, a taxpayer who appoints an agent will wish to delegate the handling of their statutory obligation to report income and self-assess their tax liabilities to the agent. Many taxpayers who appoint agents do not want to interact with HMRC. Security is important but making it unduly difficult to authorise an agent prevents taxpayers exercising their rights under the Charter or may lead to the adoption of insecure ‘workarounds’.
Agents need access to HMRC experts
Agents and taxpayers need access to HMRC support and (where appropriate) to relevant experts within HMRC. Helplines and online forums need to be properly resourced and able to deal quickly and efficiently with routine questions and issues. Escalation routes for more complex matters need to work effectively.
HMRC should introduce a designated HMRC contact for all larger agent firms – whose clients account for substantial amounts of tax and whose affairs are often complex. This contact would have a similar role to a Customer Compliance Manager working with large companies in ensuring that access to relevant HMRC expertise is available on a timely basis. We appreciate that it is not feasible to give everyone a designated contact but if there is to be trust in the tax system, and a perception of fairness, all taxpayers and their agents should have adequate access to HMRC, when they need it. Escalation routes from agent and customer helplines therefore need to be considerably improved. For smaller agents an enhanced and improved Agent Account Manager service could be a useful starting point.
The benefits of adopting our recommendations
- Providing full support for the taxpayer’s right to appoint an agent should help to promote trust in the tax system and improve voluntary compliance
- HMRC and agents interacting efficiently, making a complex tax system workable for businesses and individuals
- Reducing the risk of unexpected tax costs for taxpayers and appropriate utilisation of tax reliefs
- Giving all agents and taxpayers adequate access to HMRC and reducing complaints against HMRC
Join the debate
The recommendations in the ICAS Future of Tax paper were agreed by the ICAS Tax Board in 2020 and inform the work of ICAS Tax. They will be reflected upon and revised to reflect economic, social and political developments.
There are also opportunities to join ICAS tax committees to discuss these recommendations and many other tax policy and practical matters – email firstname.lastname@example.org to find out more about being a committee member.