HMRC is consulting on proposals and options for implementing a strategy for engaging with tax agents. In the context of the relationship agents have with HMRC on behalf of their clients, this is a key consultation.

Echoing the conclusion of the 2008 OECD Study into the role of Tax Intermediaries, that “tax advisors play a vital role in all tax systems, helping their clients understand and comply with tax obligations”, HMRC state in the foreword to the con-doc that their partnership with tax agents is essential for successful tax administration in the UK.

The con-doc envisages 5 distinct strands to the proposed strategy as follows:

• secure enrolment and segmentation of tax agents to differentiate between those who are in business and those in the voluntary sector or acting on behalf of friends and family;
• reducing time and cost for all parties by making it easier for all agents to access the services they need and by increasing their ability to self-serve on behalf of clients where appropriate;
• tailoring HMRC's support services to paid, professional agents to reflect the compliance risks inherent in their client portfolio;
• providing additional support for agents whose own standards are below those expected; and
• tackling more effectively those few agents who are found to be acting dishonestly.

Proposals are set out for implementing the first four bullets above and views are sought on the scope, pace and practicality of the changes. As announced in Budget 2011, there will be a separate further consultation later this year on legislative changes relating to the area of deliberate wrongdoing by tax agents. The previous draft legislation in this area has effectively been ‘shelved’ by HMRC as a result of concerns expressed by the profession including Chartered Accountants Ireland.

HMRC also proposes a form of ‘enrolment’ to enable it to identify as ‘bona fide’ agents those being granted the increased access via the proposed ‘self-serve’ facility which it is envisaged will also be used to build an ‘agent view’ to monitor the performance of agents.

There can be no doubt that any such step to monitor performance will require a clear understanding of what is being measured and why. This will require absolute transparency, mutually agreed standards and robust safeguards.

As part of the con-doc, HMRC states explicitly that it believes “structured self-governance of the tax agent market is the correct model for a future relationship”. Chartered Accountants Ireland shares the view that self-governance via the professional bodies is the correct model for this relationship.

In the context of self-governance, HMRC is 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; as well as considering the options for meeting ongoing professional development and governance needs, usually provided by a recognised Institute or Professional Body”.

This suggests that HMRC recognises the value inherent in our professional qualification. However, any extension of self-regulation to those who are not currently members of a professional body should fully recognise the high professional and technical standards that CAI members are required to adhere to.

The con-doc also acknowledges a shortfall in HMRC's service standards “at some areas and in some periods”, and as a result HMRC fully recognises that it must continually review the service it provides to ensure needs are met.

As part of this consultation, HMRC welcomes views from all tax agents, their representative bodies, those from the voluntary sector and individuals who provide support and advice on complying with tax obligations. Individuals or businesses who use the services of a tax agent are also encouraged to respond.

This is a unique opportunity for our members to shape our future relationship with HMRC. As Chartered Accountants Ireland was one of the stakeholders consulted in developing the consultation, we welcome HMRC's explicit acknowledgement of the vital role that agents play in the delivery of the tax system and we would encourage you to read the consultation document and feedback your views.

Closing date to respond to the consultation is 16 September 2011.