The Office of Tax Simplification (OTS) has issued a new policy paper 'Simplification issues affecting tax agents and other intermediaries'. It considers HMRC’s agent strategy and the barriers faced by paid agents and those who are appointed informally to act on behalf of a taxpayer.

The paper is one of four separate notes accompanying the OTS’s everyday tax evaluation paper. It provides an update on the 2019 reviews about Simplifying everyday tax for smaller businesses and Taxation and life events. It focuses on the role of agents, particularly in supporting taxpayers’ compliance.

The OTS make the following key points:

  • They welcome the appointment by HMRC of a senior official to oversee Agent Strategy as per their recommendation and the new Intermediaries Directorate created in Autumn 2021.
  • HMRC have not yet met reasonable expectations in improving agent access to client information and a review is recommended.
  • A successful rollout of new ways of working and new digital administration systems is only possible if agents are fully involved in the development of the systems from the start.
  • Agent engagement is vital ahead of the introduction of Making Tax Digital for Income Tax in April 2024, the Timely Payment In-year Calculation Pilot from April 2022, which currently plans to exclude agents, and the Single Customer Account, where agent consultation should be undertaken to ensure appropriate access to underlying data is built-in from day one.
  • Current processes for registering as an agent and appointing an agent are complex and confusing. In particular:
    • The requirement to have an anti-money laundering supervisor restricts agents’ registration to paid agents for no good reason. It would be more helpful to include agents who follow HMRC standards and are members of relevant professional bodies.
    • The need to apply for separate online services access when the agent already has an agent services account (ASA) is confusing, as is the digital handshake requirement in areas such as the online Property account and Trust Registration Service.
    • Only being able to have one ASA per agent causes practical issues around staff access, security and ease of use.
    • Effective consultation is required about merging HMRC online services for agents and the ASA.
  • There are specific issues for taxpayers who appoint multiple agents; this will come into focus with the introduction of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA),
  • There are basic infrastructure issues around MTD for ITSA which must be addressed at an early stage. These include allowing two separate agents to have access to the service for the same taxpayer, e.g. a bookkeeper and the accountant/tax adviser and the lack of facility for agents to do a bulk transfer of clients from one service to another.
  • HMRC should publish guidance on how powers of attorney can be lodged with them and review the trusted helper route which is largely unused.
  • HMRC needs to better publicise the process for digital online authorisations through the business tax account and the acceptance by HMRC of digital signatures on form 64-8.

Useful guides on this topic

Agent Service Account & VAT: Top Tips
What is an Agent Service Account? Why do you need one? Troubleshooting, Making Tax Digital for VAT, Making VAT Digital, lost user-id? FAQS.

MTD: Income Tax Pilot Tool
Making Tax Digital (MTD) for Income Tax. Are you eligible to take part in the MTD Pilot?

MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital (MTD)? How will it work? Which clients will be excluded? What planning needs to be undertaken?  

External link

OTS evaluation paper on simplification issues affecting tax agents and other intermediaries 


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