Implications for authorising tax agents

Tax agents and accountants have generally become integral for businesses of all sizes. But what can the agent do for a business and what should business owners expect?

There are different ways of giving your agent authority over your tax affairs, depending on which tax services are used. But one thing that company owners should be aware of is that the legal buck usually stops with them.

A taxpayer may appeal a penalty for late filing, late payment, error or mistake, so long as they have grounds to appeal, known legally as a reasonable excuse. For nearly all taxes, except VAT, it is reasonable to rely on the work of an accountant or a tax adviser, provided that the taxpayer takes precautions to check that the adviser is qualified and is performing the tasks with due care and keeping within filing deadlines.

But the devil is in the detail, with successful appeals relying on the tax issues being complex and needing an agent and the taxpayer actively monitoring the agent’s work. Executives must check the agent’s information and let them know it’s correct before they submit it to HMRC. Remember too that an agent will hold critical financial information.

What an authorised agent can do on your behalf

Construction Industry Scheme: when authorised, agents can access your returns, subcontractors’ income and deductions.

Corporation Tax: when authorised, agents will gain access to your company and financial information and be able to update the company communication and contact details

Making Tax Digital for Income Tax: when authorised, agents can sign taxpayers up for Making Tax Digital for Income Tax, create, store and correct digital records of your self-employment and property income and expenses. They can send your quarterly updates to HMRC and submit your tax return.

Self Assessment: when authorised, your agent can submit tax returns and claim tax relief, holding your full personal details including personal national insurance numbers and the unique taxpayer reference. They have the power to discuss your current and previous tax returns with HMRC and view and change your details, such as sources of income. This includes providing bank details to HMRC when repayment is due, viewing and submitting your updates (income and expenses) and finalising your overall tax position.

They can also cancel a taxpayers Self Assessment registration.

In this case, before authorising an agent, the taxpayer must first register for Self Assessment. Once done, taxpayers can use the ‘64-8 Authorising your agent’ form to mandate an agent.

Tax credits: when authorised, your agent will gain access to your personal and financial information relating to your tax credit claim. They can act on your behalf but cannot receive payments. Correspondence will still be sent to you.

VAT: an authorised agent can (in writing or by telephone only) discuss your VAT with HMRC and sign paper documents on the taxpayer’s behalf. This includes viewing, changing and submitting your VAT details, payments and liabilities. They can also cancel your VAT registration and appeal a late submission or late payment penalty.

Issues with online agent authorisation

Taxpayers can authorise an agent for a specific tax year using an online service or the business tax account. If there are problems with an online service, taxpayers can use the ‘64-8 authorising your agent’ form. It’s important that the information is clearly presented and that the correct agent codes for the relevant tax regimes are provided. HMRC recommend not including a covering letter unless it contains essential information necessary to process the form.

Writing anything on the form outside the boxes is forbidden and taxpayers should not provide any additional information in the form fields other than the requested information.

Compliance checks and agents

It’s not unusual for HMRC to issue compliance checks to ensure the correct amount of tax is paid for specific areas. Frequently, businesses will only employ an agent when compliance issues arise. In this case, taxpayers should use the ‘Disclosures: temporary authorisation to allow HMRC to deal with your tax adviser’ (COMP1a).

This is a temporary authorisation and will not cancel or amend any permanent authorisation that you have already sent to HMRC, for example, any authorisation through HMRC’s Online Service or form 64-8. This form gives your written consent for HMRC to exchange and disclose information relevant to the disclosure with the adviser named. It relates only to the disclosure of the year(s)/period(s) that you enter on this form.

Giving agents limited authorisation

If you want to authorise an agent to deal with a specific area of your tax, but not act as a full tax agent on all records, this is called limited authorisation. An agent with limited authorisation can talk to HMRC and answer any questions on your behalf and help you to fill in forms. They will not have access to your tax online.

To give an agent limited authorisation to help deal with your tax, write to HMRC.

Form 64-8 Authorising your agent at https://assets.publishing.service.gov.uk/media/6852e9f02b367fdd44c15e8a/64-8.pdf

‘Disclosures: temporary authorisation to allow HMRC to deal with your tax adviser’ (COMP1a) at https://www.tax.service.gov.uk/print-and-post/form/Compliance/1.0/COMP1a/comp1a.xdp

If you need help with any of this or are looking for support on a compliance issue, please contact us.