The courts have found that HMRC was wrong to withdraw agent status from accountancy firm Christopher Lunn & Co.
HMRC withdrew agent status from Lunn & Co, following the start of a criminal and civil investigation in 2010. Lunn & Co's 7,000 clients are under investigation after enquiries into a sample of clients revealed a 98% error rate.
The case has now been referred back to HMRC so that it can give the firm the opportunity to make the representations that it may under the law. This is only the second time that HMRC has tried to withdraw agent status of any firm.
The Working with Tax Agents angle
HMRC is back at the drawing board with its Working with Tax Agents proposals. Lunn & Co is not registered with any recognised professional body, looking forward, even if HMRC were to demand in the future some new type of "competent agent registration scheme" it seems unlikely that it would be able to refuse registration to those who are not members of the professional bodies. Such a scheme would seem unlikely to root out rogues on such a scale.
HMRC carries little data on agents, good or bad. In the past it had the capacity to "disarm" rogues agents by opening investigations into a large number of a practice's clients. An effective strategy, but presumably this is no longer in use as it it requires real people.
