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HMRC have declared ‘total warfare’ on the country’s tax agents, veteran chartered accountant Chris Try has warned.
His message follows the Revenue’s 8 February issuing of draft legislation on deliberate wrongdoing by tax agents, which is meant to be considered alongside last December’s consultation paper Working with Tax Agents: The Next Stage.
‘I have read the [new] document, and it constitutes a Pearl Harbor moment for all tax agents in the UK; 8 February 2010 is a day of infamy,’ said Mr Try, a senior partner at Try Lunn & Co in Hull.
‘The taxpayers’ charter is dead. Working Together is dead. The [draft legislation] is a declaration of unrestricted, total warfare against all of those who make the UK tax system work,’ he added.
He posited the belief that ‘simple, every day, hitherto uncontroversial situations are now to be formally and officially classed as “deliberate wrongdoing”’, which could lead to ‘a huge swathe of new penalties’ for agents caught in the taxman’s expanded net.
Mr Try highlighted clause 3 of the draft legislation, which begins:
‘(1) A tax agent engages in deliberate wrongdoing if, with respect to the tax affairs of one or more clients–
‘(a) the tax agent does an act that is capable (directly or indirectly) of bringing about a loss of tax, and
‘(b) the act is done deliberately, with the intention of bringing about such a loss.
‘(2) It does not matter whether a loss is actually brought about.
‘(3) Nor does it matter whether the tax agent does the act alone or on the instruction of the client.
‘(4) “Loss of tax” means loss of revenue from tax, and includes a loss involving a relief, deduction, repayment or credit of any kind.
Mr Try claimed: ‘Routine discussion and advice… that result in a capital allowances claim or advising people about the tax effect of paying personal pension contributions is now, according to HMRC, “deliberate wrongdoing”.’
He went on to question the Revenue’s definition of an agent and his/her clients, saying the proposed rules mean that anyone who passes on a tax professional’s advice – to friends, acquaintances, etc – will be considered by HMRC as agents and therefore subject to the new legislation.
This, he said, is a ‘bizarre and lunatic state of affairs’ that also dictates, in clause 2, that anyone who is privy to an agent’s advice via word of mouth automatically become’s the agent’s client.
‘The chaps at HMRC have drafted some astonishing legislation in their time, but this stuff takes some beating,’ said Mr Try, who voiced the concern that under draft clause 10(2), an agent under scrutiny by the taxman will not be permitted a fair hearing at a tribunal, and will be allowed to present a summary of representations made to the Revenue.
The veteran accountant concluded: ‘The public does not deserve… the appalling way in which [the Revenue] now conducts itself. HMRC [are] attacking the public and my profession. [The department] should be careful and think on because it will learn that, “this animal is dangerous: when attacked it defends itself”.’
Editorial note, 7 October 2010: neither Chris Try nor Try Lunn & Co have any connection with media accountancy firm Christopher Lunn & Company
