"HMRC could achieve better value for money by increasing
the level of tax compliance of taxpayers who are represented by tax
agents, while doing more to minimize the costs of its engagement
with such agents. The Department has a strategy for working more
closely with tax agents but implementation will require a plan
detailing how the expected benefits will be achieved. To the extent
that there are opportunities to increase tax revenues
significantly, it may make sense to incur some short term set-up
costs."
Amyas Morse, head of the National Audit Office, 13
October 2010
HM Revenue and Customs might be able to increase tax revenues by
providing more support to professional tax agents, third parties
paid by taxpayers to act on their behalf in their dealings with the
Department.
In a report to Parliament today, the National Audit Office
affirms that good tax agents help their clients get their tax
right. But, according to an analysis carried out by the NAO of a
sample of tax returns, self-assessed income tax returns filed by
customers represented by agents are more likely to have
under-declarations of tax (resulting from error, failure to take
reasonable care or evasion) than returns filed by non-represented
taxpayers. A key reason may be that the tax affairs agents deal
with are more complex. However, the analysis indicates that paying
for professional help is not without risk for a taxpayer and that
there might be an opportunity for HMRC to increase tax revenues by
providing better support to tax agents and by better targeting of
poorer ones.
Today's report suggests that a three per cent reduction in the
average amount of tax under-declared by represented taxpayers could
lead to over £100 million extra revenue each year.
At present, lack of data on individual tax agents prevents the
Department's taking a tailored approach to its dealings with agents
and providing feedback on performance. With better use of data,
HMRC could make more targeted interventions based on risk and
achieve greater value for money.
HMRC has recognized the importance of developing its
relationship with tax agents and has taken steps to work more
effectively with this group. Initiatives have included the
introduction of a priority telephone line for agents' queries on
self-assessed income tax and PAYE. The Department has also
encouraged tax agents to file tax returns online.
Publication details:
HC: 486, 2010-2011
ISBN: 9780102965483