According to a report published last month, HMRC might be able to increase tax revenues by providing more support to professional tax agents and other third parties paid by taxpayers to act on their behalf.

In a report to Parliament last month the National Audit Office (NAO) states that ‘good tax agents help their clients get their tax right’. But according to an analysis carried out by the NAO of a sample of tax returns, self-assessed income tax returns filed by customers represented by agents are more likely to have under-declarations of tax (resulting from error, failure to take reasonable care or evasion) than returns filed by non-represented taxpayers. The NAO believe the key reason may be that the tax affairs agents deal with are more complex.

At present, lack of data on individual tax agents prevents HMRC from taking a tailored approach to its dealings with agents and providing feedback on performance. The report suggests that with better use of data, HMRC could make more targeted interventions based on risk and achieve greater value for money.

There are also a number of recommendations made in the report, which are mentioned here without prejudice:

• HMRC could improve tax agent compliance by providing additional support to tax agents experiencing difficulties and applying sanctions where performance is poor.
• HMRC currently does not set any conditions on firms or individuals wishing to work as tax agents - registration can facilitate performance monitoring.
• HMRC could reduce post from agents by dealing with their letters more quickly and so avoid the need for progress chasing by agents.

The report, together with supporting documentation, can be found at http://www.nao.org.uk/publications/1011/tax_agents.aspx