New legislation aimed at tax repayment agents to be introduced

11 January 2023

Following the consultation “Raising standards in tax advice: protecting customers claiming tax repayments” HM Revenue and Customs (HMRC) has confirmed new legislation will be created.

In an accompanying press release HMRC confirms that new legislation will seek to make legally binding ‘assignments’ invalid. An ‘assignment’ is an agreement where a taxpayer gives permission for a repayment agent to receive a tax refund directly from HMRC. This may be cancelled only if both parties agree to do so, creating issues when an individual is unhappy with the service they are receiving and wishes to take over management of their account.

The alternative arrangement is for the taxpayer to make a ‘nomination’, this can be cancelled at any point by the individual, giving them greater control.

Assignments made before the new legislation take effect will still be legally binding, but any made after the date will be invalid.

HMRC is also announcing the following measures:

  • updated standards for agents – applicable to all tax agents and include greater transparency requirements
  • a new HMRC registration process for repayment agents – to make the agent sector more transparent so customers better understand what they are signing up to

Included in the updated standards for agents is:

  • greater evidence of customer consent - this aims to ensure that taxpayers better understand the agreement they’re entering into
  • stricter transparency rules, including introducing a 14-day ‘cooling off’ period for customers after entering into an arrangement with an agent, and an obligation on agents to ensure all communications and advertising material are fair, clear, accurate and do not mislead or conceal material facts.

The CIPP responded to the initial consultation, which can be read by members on our consultation responses page in our policy hub.

CIPP comment

CIPP responses to government calls for evidence and consultations are available to members only. In order to keep up to date with all the latest payroll news, along with information relating to potential future changes, don't delay and sign up to become a member of the CIPP today, which you can do here.

Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.