Are you classed as a high volume agent?
Businesses that process a high number of repayment claims on behalf of their clients could find themselves being targeted by HMRC for being a high volume agent.
HMRC are calling these high volume agents (HVAs), and they are targeting businesses such as accountancy practices and tax agents, as they have concerns about the records maintained by the clients which support the repayment claims.
At the beginning, HMRC focused on high risk HVAs who provided their services on a no repayment, no fee basis. These types of HVAs tend not to have much contact in person with the client and often receives the tax repayment as a nominated person.
But now HMRC have started to approach small and medium sized accountancy practices which many are members of one of the tax or accountancy institutes.
HMRC targets accountancy and tax practices who are claiming a high volume of self-assessments each year for their clients, which results in the client getting a repayment of tax.
HMRC are under the impression that repayment claims may be inflated without foundation because of estimates introduced into the accounts.
Don’t think your business has a high amount? Well, HMRC targeted one firm which only had thirty CIS subcontractors so they are not just targeting practices that process hundreds of repayments.
HMRC has guidance available here.
What happens if your business comes under scrutiny?
For HMRC to work out whether you are one they will do a risk assessment which focuses on returns where the expenses claimed are more than 10% of the turnover. If this happens HMRC will first contact the business by letter stating the intention that they are going to visit the office.
They will then ask for paperwork relating to the cases where they are investigating so they can review them. Two HMRC officers will attend and questions will be asked to the agent as to how they check legitimacy of the client, how they prepare accounts, returns, whether clients are seen in person and what checks are taken on business records supporting the repayment claim.
After their review they will provide feedback (areas of weaknesses), the agent may be asked to participate in an amendment programme if the officers suspect inflated repayment claims have been made.
What about if you refuse to let HMRC officers visit?
If you refuse to let them visit, HMRC will block tax repayments being made to the agent and the agents clients. The agent will also get limited access to HMRC’s agent online services.
If you have any doubts you can contact us today on firstname.lastname@example.org to find out more.