What do you need to consider when setting up as a tax agent? What are the steps? How do you register with HMRC?
This is a freeview ‘At a glance’ guide to setting up as a tax agent.
This guide works through the key regulatory and compliance steps new professional tax agents should take, points they need to consider and things they need to be aware of, as well as registering with HMRC
Professional body requirements and best practice
If you are already a member of a professional bookkeeping, accounting or tax body, you will need to comply with their specific regulatory requirements.
The rules differ between professional bodies, requirements normally include:
- Holding a practising certificate: this authorises you to provide certain services.
- Having Professional Indemnity Insurance (PII).
- Issuing clients with a letter of engagement, setting out the scope of your services.
- Keeping yourself up-to-date via Continuing Professional Development (CPD).
If you are not a member of a professional body, you should still consider if any of the requirements set by such organisations would benefit you. This can be important in Protecting yourself from negligence claims.
In running a practice of any kind, you will need other forms of insurance, as well as PII, such as public liability insurance and employer’s liability insurance. If you start to use your car for business travel, the insurance policy on that may need amending too.
Anti-Money Laundering supervision
Tax agents have registered for Anti-Money Laundering (AML) supervision.
- If you are a member of a professional body, this is done through membership. The body must be a recognised supervisory body (such as the ICAEW, ACCA, CIOT or AAT).
- If you are not a member of a supervisory body for AML, registration with HMRC can take up to 45 days.
Anti-Money Laundering checks
- You are required to undertake Anti-Money Laundering checks when you take on clients.
- Having Pro-forma checklists can make this much simpler.
General Data Protection Regulation and the Information Commissioner’s Office
- As you are almost certainly holding information of private individuals, you need to comply with the General Data Protection Regulation (GDPR).
- You will need to register and pay an annual data protection fee to the Information Commissioner’s Office (ICO).
Register your own business with HMRC for tax
- You will need to Register your own business with HMRC for tax.
- How you register will depend on the Type of business you have.
You may wish to seek specialist advice or support from a technical support service such as Virtual Tax Partner.
Professional Conduct in Relation to Taxation
The Professional Conduct in Relation to Taxation (PCRT), adopted by the main professional accounting and tax bodies, sets out the professional standards that are expected of a member when undertaking tax work.
Even if you are not a member of a professional body, this guidance is very useful to all tax agents.
HMRC’s agent standards
HMRC’s ‘standards for agents’ sets out what HMRC expect from tax agents.
Many tax advisers start their practices from home. This can result in specific considerations, such as:
- Would running a business from home be in breach of any tenancy agreement?
- Is permission needed from a mortgage provider, local planning office or council?
- Will Business Rates be payable (rather than Council Tax) on the part of the property used for the business?
Registering as an agent with HMRC
You will need to register as an agent with HMRC and obtain an agent code for the services you wish to provide.
As of 2 August 2023, you must have an agent services account if you are a tax agent and you want to submit Income Tax or PAYE repayment claims on behalf of others charge a fee for doing this.
When making repayment claims from 26 February 2024, if you will receive any tax repayment as agent, it will be necessary to include your agent reference number, name and address in the nomination section of:
- Form P87 for PAYE reference claims.
- The Marriage Allowance print and post form.
New forms will be published to include this information.
HMRC provides an agent code for each service: Self Assessment, Corporation Tax, PAYE, VAT etc
Along with details of your anti-money laundering supervision registration, you will need to provide your:
- Full name.
- Trading name (if different).
- Address that your business activities are carried out from (this cannot be a PO box address).
- Telephone number.
- Email address.
- National Insurance number.
- Self Assessment Unique Taxpayer Reference (UTR) (you must provide this if you are a director with a UTR, a sole trader or a partner).
- Partnership UTR, limited liability partnership UTR or company UTR (if applicable).
- Company registration number (if applicable).
- VAT registration number (if applicable).
- Employer PAYE reference (if applicable).
- Details of which taxes you plan to deal with.
There are different requirements if your business is based outside of the UK.
Once you have registered with HMRC as an agent, you can:
- Create an Agent Services Account.
- Enrol the tax services you wish to provide into your HMRC online services account, using your agent code.
- Get authorised to act as a tax agent on behalf of your clients.
Useful guides on this topic
Sole trader v. limited company: Tax differences & savings (2023/24)
Is it better from both a tax and legal point of view to run your business as a sole trader or as a company? Are there tax advantages in running a business as a company? What legal protections apply?
Which trading structure is best for me?
What are the key tax and legal differences between the different trading structures of the self-employed, a partnership or a company?
How to start a company
How do you go about creating a company? What do you need to do to start a company? A practical guide on how to form (incorporate) a private limited company covering the key points that you need to consider.
AML: Anti-Money Laundering Zone
AML Zone contains checklists and guidance on the Anti-Money Laundering requirements that businesses need to follow.
- Find out how to register as a professional tax agent with HMRC
- Register with HMRC for an agent services account
- Create an agent services account
- Apply for an agent services account if you're not based in the UK
- Finish setting up your agent services account if you are overseas
- How to enrol a tax service onto your HMRC Online Services account
- How to get an agent code for Corporation Tax or Self Assessment
- How to get an agent reference number for VAT
- How to get an agent reference number for PAYE
- How to register for the Stamp Taxes for Agents online service
- How to get authorised to act as a tax agent on behalf of your clients
- How to use the Online Agent Authorisation to get authorised as a tax agent
- How to use the digital handshake to get authorised as a tax agent
- Find out how to use the Self Assessment for Agents online service
- Find out how to use the Corporation Tax for Agents online service
- Find out how to use the VAT for Agents online service
- Find out how to use the PAYE for Agents online service
- How to register your client for a tax service as an agent
- What to do if your tax agent business is changing