COMPLIANCE
away. Some customers may not have been aware they were dealing with a third party and not HMRC. What next for assignments? From the responses HMRC received, most respondents who weren’t repayment agents supported restricting the use of assignments. Individuals and tax agents supported the prohibition of assignments. However, professional bodies expressed mixed views on this matter. Some supported the removal of assignments altogether, whereas others suggested the continued use, but recommended a consumer protection message be added to provide clarity to taxpayers. Most repayment agents expressed concerns that restricting the use of assignments would be detrimental to their business. This comes as no surprise, as this is a form of revenue for these business models. HMRC listened to the views of all respondents, and has now created a dedicated repayment agent taskforce, who will review the processes being used by agents, especially around the use of assignments and ensuring they create a valid legal assignment. Moving forward, the consultation response confirms, ‘the government intends to legislate to render void assignments of income tax repayments. The effect of such legislation will be that assignments of income tax repayments will have no legal effect and the repayment will remain the property of the customer.’ HMRC is aware that some repayment agents provide invaluable services to taxpayers, and are doing so by using nominations, which will still be available for them to use. This allows taxpayers to still use a repayment agent to help with their tax repayments, and agents to continue to collect their fees in advance of paying their customer. This seems to be a practical and reasonable solution for all parties involved, including HMRC, as nominations are processed quicker than assignments. Updated Standards for agents The consultation responses supported the need for greater transparency in repayment agent advertising, and the terms and conditions of agreements used. As such, HMRC updated its Standard for agents guidance pages in January 2023, to provide clarity around a number of issues
raised in the consultation, including, but not restricted to: l ensuring marketing material clarifies that agents are not part of, or acting on behalf of, HMRC l ensuring the identify of the agent or firm is clear, especially when known by a trading name / shortened version of the legal name l before any contract is agreed, ensuring the client understands: ❍ how the agent should be paid for their services ❍ how any repayment that arises will reach the client and what conditions apply (if any) ❍ details of deductions by the agent from any repayment the agent handles for the client ❍ the rights that both the agent and their client have to end the arrangement early or unilaterally. In the response summary, HMRC states it has, ‘a range of powers it can and will use where agents breach these Standards, including refusing to deal with that agent. Where behaviour falls short of the Standard, HMRC will work with the agent, and will pause processing their claims if they fail to improve’. It’s promising to see that HMRC is committed to reducing the number of repayment agents not acting in line with the Standards set out in its guidance. You can familiarise yourself with the HMRC Standard for agents here, http:// ow.ly/qO8b50MT2WK.
ensure it maintains a modern approach to customers who provide agents permission to act on their behalf. HMRC will then be more comfortable that the customer is aware of what they’re agreeing to and provides the correct level of consent. This is especially important in scenarios when a nomination is implemented where the repayment is paid to someone other than the customer. Repayment agents: register here This may come as a surprise to some of you, but as it stands, repayment agents aren’t required to register with HMRC. This means the department is currently unable to check if agents are registered for anti- money laundering supervision, or if they’re meeting the Standards for agents. HMRC has confirmed, ‘HMRC will introduce a new requirement for repayment agents to register with HMRC that will meet the needs of both repayment agents and HMRC, and support future strengthening of oversight of the tax advice market’. More information about this new approach will be set out in early 2023. HMRC also published a policy paper, How HMRC works with agents , in January 2023. You can view this paper here http:// ow.ly/ZjF650MzUVq. To view the CIPP’s response to the consultation, head over to the Policy Hub area of the MyCIPP pages http://ow.ly/ QEsg50MA7iZ. n ‘HMRC will introduce a new requirement for repayment agents to register with HMRC that will meet the needs of both repayment agents and HMRC, and support future strengthening of oversight of the tax advice market’
The strengthening of agency authorisation
As mentioned earlier, HMRC has created the newly set up dedicated repayment agent taskforce. In line with this new team, HMRC has also confirmed that a review into the sign-up processes used by repayment agents will be carried out, to ensure they meet the criteria laid out in the Standard for agents guidance. The responses highlighted to HMRC that the current methods of authorisation don’t allow customers to limit agents to specific repayment claims. The responses questioned whether HMRC should do more to validate claims received, which have been signed with the customer’s intent. Therefore, over the coming year, HMRC has pledged to meet with agents, customers and software providers, to
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| Professional in Payroll, Pensions and Reward |
Issue 88 | March 2023
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