Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Deal or no deal?

MIKE TRUMAN introduces a special issue on the consultation on the future relationship between tax agents and HMRC


  • Taxation wants your input into a response to the consultation document.
  • We cannot return to a local district-based HMRC.
  • Self-service should be welcomed and even extended.
  • Christopher Lunn indicates the need for more than just procedural guidance.
  • Will HMRC become the regulator of last resort?

I don’t normally allow any one subject to completely take over the main articles in an issue of Taxation. We have a diverse readership, and I try to reflect that in the articles we commission and publish.

However, the overwhelming majority of our readers are tax agents, and Establishing the Future Relationship Between the Tax Agent Community and HMRC marks the start of a process that will lead to a very different way of working.

It is therefore vitally important that the voice of as many agents as possible is heard before the consultation period ends. The main institutes will of course be making their own representations, and looking to their members for their input.

Taxation would encourage all our readers who are members of such representative bodies to use those opportunities to have their say.

Reader response

However, Taxation would also like to put forward the views of our readers, in a formal response to the consultation document’s questions.

We want to hear from you even if you also contribute to your institute’s response, and especially if you do not, or are not a member of any institute. We therefore have an online survey, where you can give us your views.

We would like to hear from you in as much detail as you can, responding directly to the issues raised in the consultation document, as that is the way that the Taxation response will be prepared.

Above all, we are looking to submit a well-argued response, explaining the reasons why the consultation document’s proposals are either supported or rejected.

The response we submit to the consultation will be your views, not those of the magazine’s editorial team. Over the next two months we hope to reflect a range of views in the magazine, and we start this week with articles from Paul Aplin as a partner in a smaller firm, and Brian Redford giving the view from HMRC.

However, long-standing readers are not going to be surprised if I also have my say…

The way we were

Given a free hand to redefine the relationship between agents and HMRC, I would want to keep some of the advances that modern technology has brought (or could bring, if fully and properly implemented), and keep some of the specialist offices which have been giving good service to the taxpayers and agents they deal with.

But for ordinary compliance work I would return to the structure and staffing of two decades ago: local offices; permanent staff handling allocations of cases for which they took full responsibility, and who had been properly trained in tax, not just in the processing task on which they were currently engaged; District Inspectors who had genuine charge of their office, and who could build good professional relationships with local accountancy practices, knowing the ones that could be trusted and the ones that could not.

That is what I would say if I had a free hand. But, as a response to the consultation document, it would simply be self-indulgence.

The truth is, we’re never going back to those times. Taxation campaigned unsuccessfully to stop the staff cuts in HMRC, and it gives me no pleasure to be proved right as the department struggles to cope with the flood of correspondence and phone calls, leading to a collapse in staff morale and increasing frustration in the rest of the tax profession.

We will still argue that a further cut is incomprehensible until a better level of service has been restored.

But if we are not going to get those staff back, and the remaining junior staff are not going to have proper training so that they can talk to us knowledgeably (and be worth poaching…), then we have to look at other ways of making the relationship work.

Which brings us to one of the central features of this consultation document: the ability to self-serve.

Fork handles

Self-service is a very appropriate phrase, because the analogy with what happened to shopping is apposite. All the work in shopping used to be done by the shop staff.

The customer would stand (or even sit) at the counter with a list of items he or she wanted to buy, and the shop assistant would pick them off the shelves and bring them to the customer. This was service at its best.

The problem was that it could also be service at its worst. You could be standing in a queue for ages while others were served before you.

When you finally got to the counter, the shop assistant might bring you the wrong item (four candles instead of fork handles), or even worse you might have queued all that time only to find that they were out of stock. Above all, it was time consuming, and the cost of employing the staff had to be passed on to the consumer.

And so self-service supermarkets were born. Shoppers went round the store and put their purchases into baskets themselves, paying for them all at the till.

Some customers, particularly the middle classes, bemoaned the loss of deference and the chance to sit down and chat while shopping (one woman reportedly even threw her wire basket at Alan Sainsbury when finding her local store converted to self-service).

But the new system was essential if shops were going to offer the range of goods that shoppers wanted at an affordable price, since that meant making efficient use of staff.

Whose work?

There has already been a reaction from some that the self-service proposals in the consultation document mean accountants are being asked to do HMRC’s work ‘for them’. It seems to me that this misses the point.

Rather than starting from where we are now and jealously guarding the demarcation lines like 1970s shop stewards, it is surely better to look at what will produce the best result for HMRC, taxpayers and agents alike.

Why should we want to preserve the current system where agents send in 64-8s and then have to wait for HMRC to process them? Surely it makes more sense for agents to go in and set the authorisation themselves, even if that is ‘doing HMRC’s job for them’?

Indeed, my criticism would be that the current self-service proposals do not go far enough. The consultation document proposes to allow enrolled agents the ability to see all the liabilities and payments across all taxes for a particular client, which is helpful.

But why not go one step further, and allow the agent to offset an agreed (or even an anticipated) repayment due on one tax against a liability due on another?

An ability to ‘lodge’ correspondence via an online workspace is helpful, but why not extend that to something more akin to ordinary email, allowing direct access to specialists dealing with cases?

Under my thumb

The other side of the coin is that, if HMRC are going to give agents access to such self-service facilities, they are inevitably going to pay more attention to who they accept as an agent in the first place.

The Christopher Lunn judicial review case showed both that current practice means that it is exceedingly rare for someone to be ‘derecognised’ as an agent, but also that the processes for taking such a decision are almost non-existent.

The consultation document refers to future ‘procedural guidance’ in this area, separate from the consultation on ‘strengthening’ the legislation which allows HMRC to deal with dishonest tax agents.

I would suggest that more than procedural guidance is needed. The ability to exclude agents from acting is effectively a power to close down their business.

In practice, once self-service has become the norm, the same will be true of excluding agents from access to those facilities (‘you are allowed to go shopping, but not in supermarkets’).

It had never occurred to the profession that HMRC had such powers prior to Lunn, we surely need more than procedural guidance on how they are used in the future.

HMRC are understandably wary of regulating the profession directly, and we should be wary of it too.

They would prefer agents to be members of a professional body of some sort, which tests their competence to act and handles complaints against them.

This does put a rather different focus on the old, and by now rather sterile, qualified v unqualified argument. The issue is not so much whether the 30% of professional agents without qualifications are competent, but on how they prove that competence and their fitness to practise.

As for money laundering, the default may well be HMRC regulation as a last resort, but the onus is surely then on the professional bodies to provide a means for currently unqualified agents to come within the fold that does not impose excessive burdens on them, but also ensures that the competent can be separated from the incompetent.

Reply now

The normal level of response to consultation documents is miserably poor. This is potentially the largest change to happen to the tax profession since the introduction of self assessment.

Having your say as part of the consultation is therefore vital if you want to influence the way you are going to work for the next 20 years or so.

Please do respond to any invitation you receive from your professional body, if you are a member.

But please also take part in our survey and let us know your views so that we can let HMRC know what you think.

1 Comments Hide
REBECCACAVE, 06/08/2011 14:07:00

When trying to encourage a CIOT member to join the discussion on this issue I received this response: "X at the CIOT is paid to sort this out!"

The technical officers at the professional bodies are not mind readers, they need to gather the members’ views to present a balanced response to the con doc. If members do not communicate their views to the professional bodies, to Taxation, or directly to Govt, they should not complain when the resulting regulations are written to work against their interests.

Many Accountants complain that they are not listened to by their Institute. If you don't engage in the discussion you will not be heard.

back to top icon