RESPONSE TO HMRC CONSULTATION DOCUMENT: WORKING WITH TAX
AGENTS: DISHONEST CONDUCT
INTRODUCTION
The AAT is pleased to comment on the issues raised in the HMRC consultation document on
“Working with Tax Agents: Dishonest Conduct”.
We have over 49,500 full and fellow members and 65,000 student and affiliate members
worldwide. Of the full and fellow members, there are approximately 3,400 Members in
Practice who provide accountancy and taxation services to individuals, not-for-profit
organisations and the full range of business types.
The AAT is a registered charity whose objects are to advance public education and promote
the study of the practice, theory and techniques of accountancy and the prevention of crime
and promotion of the sound administration of the law.
In pursuance of those objects the AAT provides a membership body. We are participating in
this consultation as part of our contribution towards the public benefit of achieving sound and
effective administration of taxes. We also feel that the issues raised in this consultation paper
will affect our members in practice.
The AAT wishes to thank HMRC for inviting us to the consultation meetings covering
‘deliberate wrongdoing’ and ‘dishonest conduct’. The AAT was pleased to participate in those
meetings and respond to the consultation on ‘deliberate wrongdoing’.
The AAT recognises how far the legislation in this revised consultation document has moved
on from the original consultation on ‘deliberate wrongdoing’. To its credit HMRC has listened
to the comments, and addressed the concerns, expressed by the AAT and the other
professional accountancy and taxation bodies.
VESTED INTEREST
The AAT fully supports HMRC’s objective of taking effective action against a small number of
dishonest tax agents as stated in paragraph 1.6
The focus of AAT members in practice is on tax planning and compliance rather than
aggressive tax avoidance schemes, and dishonest tax agents reflect badly on the profession.
Therefore, we have a vested interest in ensuring the legislation being targeted at dishonest
tax agents has sufficient safeguards in place to prevent the legislation from being used
inappropriately against tax agents who are, shall we say, ‘difficult’ rather than being
‘dishonest’.
OBJECTIVES OF THE CONSULTATION AND THE DRAFT LEGISLATION
We note the objective of this consultation document which seeks comments on revised draft
legislation, which in turn has the HMRC policy aim objective of enabling HMRC to tackle tax
agents who act dishonestly in tax matters.
RECOMMENDATIONS
Clause 5 (2) of the draft legislation allows a period of 30 days to appeal against the
determination. In the past this would have been sufficient, however, the AAT has been
advised by members of severe delays in receiving post from HMRC whereby post is received
much later than the date of the letter. We agree that 30 days is normal in legislation.
However, the legislation should be flexible enough to allow an accused tax agent, after the 30
days, to appeal against the dishonest conduct notice to the Tribunal and give a reasonable
explanation to the Tribunal for why the tax agent was not able to appeal against the notice
within the 30 day period specified by HMRC. For example, the tax agent may never have
received the letter or may have been out of the country for several weeks.
CONSULTATION QUESTIONS
Q1: HMRC welcomes views on the revised definition of a tax agent.
The definition includes:
 a tax agent ‘is an individual’ which does not include businesses
 encompasses tax agents ‘in business’ which would exclude advise given by
individuals working for non-business organisations such as the Citizens
Advice Bureau
 tax agents that ‘are appointed indirectly’ therefore the definition is not reliant
on a direct contractual relationship between the tax agent and client
 three sub-clauses covering ‘assistance’ which covers the type of work
included in the definition.
These features reasonably clarify the individuals that should be included as tax
agents.
Q2: HMRC welcomes views on moving away from the terminology of
“deliberate wrongdoing” to “dishonest conduct”.
The draft legislation covering “dishonest conduct” identifies whom the legislation is targeted
at, namely the tax agent. It covers what is being targeted which is that the tax agent ‘does
something dishonest’ and most importantly covers the prerequisite required of any crime,
which is intent which is covered by the phrase ‘with a views to bringing about a loss of tax’.
If the legislation is interpreted correctly then it should not include tax agents who have been
provided with false information by their clients.
The terminology and definition of “dishonest conduct” is accurate and appropriate to the
proposed legislation in “Tax Agents: Dishonest Conduct”.
Q3: HMRC welcomes views on the revised definition of “loss of tax”.
Clause 3 (4) in the draft legislation which covers the “loss of tax revenue” is better defined
because it distinguishes between legitimate and illegitimate losses of tax.
Q4: HMRC welcomes views on any issues about moving to a “not exceeding”
penalty, including the level of the penalty.
In paragraph 1.5 it states that “Not all cases are suitable for criminal investigation…”
Therefore we assume that the “not exceeding” penalty especially the limit of £50,000 means
that this legislation will be used in a proportionate way for cases where a full criminal
investigation is not appropriate.
CONCLUSIONS
The draft legislation in this consultation document is accurate and precise.
It is a bit odd for the accused (tax agent) to have to appeal to the prosecutor (HMRC) against
the “dishonest conduct notice” which is a petition by the plaintiff (HMRC) rather than a tribunal
or court determination. Nevertheless, the AAT is satisfied with the safeguards introduced
whereby legal principles and processes are being legislated, for examples:
 the finding of dishonest conduct and file access notice being split into separate
stages
 the right of appeal etc.
The AAT has no issues with the draft legislation in schedule 1 of this consultation document
except for the comment regarding the 30 day limit within which to appeal.