On 31 May, HMRC published a consultation document entitled “Establishing the future relationship between the tax agent community and HM Revenue & Customs“.  If you haven’t already done so, could I suggest that you read it.  You may not be an “agent” in this context but you are almost certainly a taxpayer, so it will still be of interest.

I am an “agent” in the sense that I am (and have been for nearly 24 years) a professional tax adviser so I have read the condoc with considerable interest and, unfortunately, more than a little concern.

At this point, let me pause for a moment to look at why I have typed “agent” within quote marks.  The condoc is looking (as the title suggests) at the relationship between HMRC and “agents”.  These are, it seems, people who interact with HMRC on behalf of a taxpayer.  (HMRC’s primary concern in this condoc appears to be those “agents” who carry on a business as such, rather than those in the voluntary sector or those people who are simply helping out friends or family).  My difficulty with the term as used is that this seems to gloss over those tax professionals who act as advisers to taxpayers but who are not required to actively interact with HMRC (in most cases, because the client prefers to do this themselves).

I’ll come back to the importance of this distinction shortly.  For now, let’s look at the condoc in overview.  OK, I must now confess that I actually found this document rather frustrating to read; it is a classic case of don’t use one word where 10 will do.  There is also a great deal of repetition.  Now this isn’t just a moan about having to read the same thing over and over, it actually makes it harder to pick out the important issues being raised.  It looks like I’m not the only one; HMRC’s website, introducing the document, suggests that it has two main proposals: self serve and agent engagement.  More on those terms shortly.  Brian Redford, HMRC’s lead for this strategy, says in an article in Taxation that there are three main areas: a better understanding of who the agent community is, self serve and a better understanding of the total engagement an agent has with HMRC.

My view is that there is actually only one issue; HMRC would appear to want to be able to exercise greater control over the tax agent community.  The department has suffered some rather public embarrassment recently, losing one Judicial Review over its handling of a dispute with a tax agent and conceding in advance of a second Judicial Review on the same case.  HMRC suggests that it wants to have a better understanding of “who our agent community are” so that they can “better target support”.  This is what HMRC are calling “agent engagement” and it may sound very nice but, frankly, I already have two professional bodies giving me a range of support (as well as ensuring that I stay technically and professionally competent), what I want from HMRC is that they do their job efficiently.  If they set up a help line, I’d like the people staffing that help line to be knowledgeable and helpful; if they set up a specialist office, I would like the Inspectors in that office to be highly knowledgeable and experienced in that specialist area; if I write to an Inspector, I would like a response within a reasonable timeframe (actually, it’s 2011, I’d like to be able to communicate via email).

Anyway, the point I’m making is that HMRC seem determined to gain greater control over agents and the approach they have identified is to have us all recorded on a database so that they can monitor our performance – via the compliance record or our clients.  Now they don’t want to be seen to be forcing the issue so they don’t want this to be compulsory but they can’t just ask us nicely to sign up!  So, they’ve come up with a cunning plan.  HMRC are offering agents direct access to their systems through “self serve”.  At the moment, the suggestion is that this would allow agents to go on-line and do things such as directly alter a PAYE coding notice, self authorise themselves as an agent for a particular client or view a client’s tax liabilities.  Now, for very many agents, this would be a very positive step given the significant delays that can occur in trying to get HMRC to do these things.  However, there is a catch; in order to access self serve, the agent will have to “enrol” by providing information about themselves and their business.  Not unreasonable in itself (with the exception of one bit of information they want) to gain access to parts of HMRC’s systems but my concern is where will it lead once HMRC has us on its database?

But back to my nit picking over the definition of “agent”.  If I had (say) a specialist advisory business where I never actually had to interact with HMRC on behalf of my clients, I wouldn’t need self serve so why would I “enrol”?  In a Webinar organised by CIOT/ATT, Brian Redford was asked about agents who choose not to “enrol”.  He said that was a good point and that the question then was “how do we root them out, especially if an agent acts behind the client and it would appear to us as though the client was doing everything.”  Interesting phraseology: “root them out” and “acts behind the client”.

I will be submitting my own response to this condoc (when it is finalised I will post a copy here) as well as feeding into the CIOT’scondoc and respond.