HMRC has launched a new consultation: “Establishing the future relationship between the tax agent community and HMRC”.

This consultation is markedly different from the previous agent consultation in that there is a clear emphasis on harnessing the power of tax agents in order to streamline the tax system. This will be by introducing a self-serve mechanism.

The new consultation considers HMRC’s new agent strategy which envisages:

Allowing agents to “self-serve” – i.e. go online and adjust, for example, a PAYE, is not revolutionary considering the work agents already perform online for their clients. However, for HMRC there are considerable risks in allowing every “Tom, Dick and Harry & Co” to register as a tax agent and so at this stage the consultation is very much about exploring who should be allowed to self-serve and how they can then be monitored.

The consultation moves into some darker areas, HMRC has come up with the idea of scoring tax agents’ ability against the compliance of their clients. This would be a bit like saying the client is bad at bookkeeping, therefore his agent must be too. Thus we move on the question of training, apparently the UK is pretty unique in allowing unqualified individuals to act as tax agents. However, the fact that someone is unqualified does not necessarily mean that their abilities will be less than someone who is qualified, or does it? We simply do not know as no one has the statistics. The odds are that unqualified tax agents are going to come out badly long term: they generally have no professional body to respond on their behalf and as such have no body to monitor their professional conduct.

This consultation does not consider penalties for dishonest tax agents. The previous consultation was little short of a “train crash” for HMRC: it had centered its attention on developing a new tax penalty system for agents. Unfortunately the draft legislation was so widely drafted that a tax penalty would apply to anyone giving any form of tax advice. The vexed question of fines for tax agents has not disappeared fully; HMRC is discussing elsewhere how it can tackle more effectively those few agents who are found to be acting dishonestly.

In summary, HMRC asks the following questions in the consultation:

Agent enrolment:

On self serve:

On understanding an agent’s engagement with HMRC:

On the assessment of impacts in the Taxes Impact Assessment:

The consultation, “Establishing the future relationship between the tax agent community and HMRC” was published on 31 May 2011 and the closing date for comments is 16 September 2011.