Working with agents - unqualified/unaffiliated tax agents

I feel that there needs to be some regulation of tax agents & advisers who are not members or affiliates of one of the main accounting or taxation bodies.

We have over the years come across taxation work carried out by members of both ICAEW & CACA which falls a long way short of adequate standards, though of course there are disciplinary procedures to hold the agent to account.

We have equally come across very good taxation work carried out by unqualified & unaffiliated tax agents which is to be applauded.

However we do come across poor quality work carried out by unqualified & unaffiliated tax agents & of course the taxpayer has been liable for the consequences with little or no redress against the agent.

In a number of cases these agents have started off providing book keeping & accounting services but gradually expanded into taxation (& other areas) where they have a little knowledge & are not really competent to carry out such work.THe problem is that the client is not aware of this until a problem arises.

I agree with Michael's comments - we have come across a situation this week where the book-keeper has drafted the directors returns with the individual having little knowledge of partnership taxation and property accounts. Thankfully, the directors requested that we check them over - the result £10k plus of tax each director due to income being missed off the draft returns. There needs to be some sort of regulation or kitemarking in this area to ensure that standards are raised.

I have read many comments relating to quality of work and unqualified accountants but do not neccessarily buy into the idea that just because one don't hold a professional qualification he/she cannot pull up a decent tax computation.

In many cases they are competent to do the work they do for the size and type of businesses who uses the services of unqualified accountants (usually small).

The main problem which is very rarely mentioned is with regards to obtaining timely clearence information from unqualified accountants when clients chose to change them. Most professional bodies have regulations and influencing powers when it comes to providing clearence information mainly for corporate clients.

There is no influencing force to unqualified accountants hence if a client choses to change them, they pull up all sorts of fuss including deterrant tactics and no one can force them to provide adequate information or provide any information at all unless you go through the court process which could take years.

I have sent a clearence request to an unqualified accountant in August last year and still waiting for the information.

This is anti competitive and gives the unqualified an unfair advantage and make it difficult for clients who are not happy with their services to change and no one seem to mention this point sufficiently enough.

Another point is that of professional integrity:  I deal with many small businesses and from time to time come a cross some people who are insisting on providing fraudulant advice on tax evations or in other words assumes and expects this type of services from their accountants. 

Who are servicing their needs and who created the expectation in the first place?

Problem facing qualified chartered & certified accountants is the profilferation of providers with mickey mouse qualifications or even unqualified holding themselves out to be 'accountants' or 'tax advisers' etc.

To make matters worse, the general public know no better or don't care who is doing their tax return so long as the price is cheap. Of course there is no definition of 'accountant' anywhere - anyone who is able to add 2 figures can call themselves accountants. Contrast this with other professionals such as lawyers, doctors, pharmacists etc.

As there is a technical definition of eg. lawyer, no one else without being a member of the law society or solicitors body can call themselves 'lawyer' in the UK. In short other professions - with the exception of accountants - have a monopoly and rightly so!

Yours in disgust at the cowboys and amateurs.

Working with a variety of different tax agents ICAEW members included, over the years, I would say that there is little difference in the quality of agent work. The biggest errors I have ever seen came from an ex-HMRC inspector, who it transpired was unable to prepare a complete set of accounts and as a consequence did neither HMRC or the clients any favours.

If you do not have a tax qualification per se, you could be an ex-member of HMRC or a practicing member of the ICAEW or ACCA etc, you can still make careless errors and have poor working practices as a result of many factors, but mainly from not keeping up with current developments, or from advising in cases where you do not have the necessary skills (and generally most people are not aware if this until it is too late). You can pay for CPD courses, but still not learn, and in that case it does not matter what qualification you have.

If you have a tax qualification it is quite possible that you never quite grasped some essential parts of accounting (here the problem with the ex-tax inspector above). Witness the ongoing saga about UITF40, do we accrue income or not? The ASB cannot make up their minds but think of the impact this has on accounts under enquiry - what would be the right answer, who judges the agent's actions?
 
Take the first of HMRC's examples in its consultation, an agent writes off capital items to the P&L to ensure that tax relief is given. Perhaps if that same agent understood how capital allowances worked it would have known that there is an Annual Investment Allowance which give the same result. Is this fraud or incompetence? Does this really justify a £50k penalty?
 
The wider issue here is that the tax system is complex and agents are now being forced into doing much of HMRC's legwork. This consultation reveals that HMRC does not trust any variety of agent. I would like to see the ICAEW thinking about the wider picture here, which means sticking up for all its members and ensuring that there are comprehensive safeguards in place to prevent HMRC from being able to make allegations of fraud and destroying a practice.

Regardless of whether tax agents are unqualified or have mickey mouse qualifications or not, one would NEVER expect to see a nurse performing surgery or a pharmacy technician dispensing prescription drugs, or a non-lawyer handling sale of land...even if all these people "can do the job" adequately. Why? All these other professions enhance the value of their qualification & training & protect members' interest...something the accounting bodies cannot or are unable to do...because they are so busy in-fighting among themselves. I expect most members did not undertake all that education & training only to have to compete with unqualifieds (who have just opened up the tax software package) holding themselves to be "tax agents" or "accountants". As a result the Chartered qualification's prestige is diluted & preception tarnished. I'm simply speaking in terms of self-preservation in the present econimc climate.

This is a fascinating area. As an ACA myself I have experience and expertise in certain areas, but not the detailed tax knowledge required to complete the tax return of an individual in an owner managed business. Just because I am an accountant does not mean I am the right person to engage for specific services and as such always deny invitations to advise or support on areas where I have insufficient skills, but refer to an apppropriate source.

As such I chose to engage an unqualifed/unaffiliated individual to complete the relevant returns pertaining to taxation/payroll/VAT and advise on methods of income extraction for my husbands owner managed business.

I was very badly let down and abandoned two weeks prior to a key filing deadline. I was appalled that this happened because I had no recourse whatsoever. At least with the help of my contacts and training I was able to appreciate that this was:

1. a major issue, and
2. could get it resolved

The majority of the clients in the same position would be unable to say the same.

There should be some way of the public being able to verify the ability of the individuals they engage to assist them with what is a complex area and to offer them some kind of protection.

As we know professionals don't always get it right but there are procedures for recourse and/or recompense. Maybe a scheme of self registration such as a guild for non-qualifieds, where members have to make declarations regarding their client procedures which have to adhere to minimum standards, pay a fee to join, can attend regular updates and technical seminars where attendance records can be made available to prospective clients, have a clear linkage to HMRC such that technical releases are made availiable, could be considered.

The market should be such that there is a choice, and a price range to match the level of service provided. Included in that choice could be an intermediate tier of firms/individuals which have some means of demonstrating their professionalism and adherence to a quality benchmark, and give the opportunity for a more informed choice for prospective clients.

CPD? Someone just subscribed to my website with the comment "having now passed my XXX exams" I have a CPD requirement", which was quite interesting to me, as it makes one wonder what sort structured or unstructured training was being undertaken before.

If you are not a member of a professional body you have no CPD requirement.

Perhaps HMRC should request that all agents do CPD? I would not object to filing a CPD return to HMRC as well as to the ICAEW. I guess HMRC could frame it in the same way as the penalty for senior accounting officers, and so one would supply a certificate to say that "My tax knowledge is up to date and adequate to equip me to give advice as an agent for [tax year]."

The only problem with this though are the overseas agents as they are probably outside HMRC's jurisdiction. Anyone any thoughts on their plight?

It really is about time the professional bodies made a concerted effort to get formal protection for the use of the title 'accountant' and the logical extension to prevent unqualified individuals acting as agents. One cannot hold oneself out to be a solicitor so why can any fool be able to call themselves an accountant and act as a tax agent.

I lost a small client last year to an unqualified bookkeeper who acted for one of his friends on the grounds that said bookkeeper had promised that he could halve his tax liability by telling him how much he needed to declare for the business he was in as opposed to declaring his actual earnings.

I have always been a believer in a free market and to some degree people get what they pay for.

Would not want to end up in a position where ICAEW monitored firms on behalf of ICAEW. Can you imagine HMRC during negotiations suggesting that it may have to report the accountant to its own Institute or in an alternative scenario have its right to act as an agent withdrawn? No doubt practitioners being forced to stay a member of ICAEW to carry on practising would suit ICAEW down to the ground.

Not sure why HMRC regard this as a significnat problem, if the agent is not performing they can quite easily write directly to the client and have all sorts of remedies to otain information.

Peter Hollis

I think that you have hit the nail on the head about HMRC gaining mileage from the use of the threat to contact a professional body. I had warnings from sources within HMRC over two years ago that this exactly what is envisaged and desired.

I accept that there are good and bad advisers in both camps. My concern is that as an ICAEW member I find myself working to a professional standard, which others are not. My most recent three cases of clients coming to me from unqualifieds demonstrate this clearly:

Case 1: Self employed CIS contractor - 2009 Return completed by a 'high volume CIS Return' business. Information requested? CIS advice slips only - they completed the rest, including expense claims but without requesting any supporting information. Client receives refund, pays agent, job done. No questions asked about work done after last CIS job completed. Client has set up a new business within the tax year but no questions asked about that or any other sources of income.

Case 2: Client set up business in 2001, should have registered for VAT in 2005, finds out last month. Unqualified accountant never 'spotted' need to VAT Register. Client never even given accounts, just told how much tax to pay. Quote - 'the tax bill was low and the accountants fees were acceptable so I thought he was doing a good job for me.' How often do we hear that? Also no PAYE operated for 2 staff over 10 years.

Case 3: Unqualified goes off to Spain leaving client in middle of investigation. On receipt of records from HMRC it appears that accountant only declared CIS income received direct into business bank account from main contractors and ignored the other bankings from private clients amounting to £30k plus a year and no accounting for cash jobs.

This is my recent experience of unqualified agents.

I am not trying to tar all unqualifieds with the same brush, but if any CA made similar errors I would expect serious questions to be asked. Are any unqualifieds covered by PII? What chance of any comeback for the client? Will the unqualifieds get away with these errors on the basis that the client is directly responsible to the authorities and then has to risk the cost of taking up issues of culpability with the unqualified agent?

A dangerous aspect of inadequately trained and qualified accountants is often that neither they nor the client realises how much they do not know. Proper taining and experience does not lodge a constantly updated version of the taxes acts etc in an accountants head (Not in my case anyway!) but does make one aware when further reseach/assistance is required. 

I have seen high incompetence from unqualifieds who have not only eaten into the market but actually have made me reduce my fees to compete. Why should I charge the same as someone who does not know what they are doing and hasn't invested in their qualification like I have ?? !!!.

The professional bodies need to start working together to sort out this problem and protect our profession.

I am currently working for a practice that is unaffiliated with any professioonal body. I'm appalled by the activities all work is outsourced to India which is another issue as I think clients should be made aware of where their information is being sent as a part of data protection! The work then comes prepared from India and 9 times out of 10 gets sent out to the client without any further check!! Being the only qualified individual I get to review a small fraction of the work processed! The clients speak to an 'advisor' to whom has no qualifications what so ever! It a disgrace to the proffession and I can tell you the clients aren't paying any smaller fees!!

It is interesting to read references made about Doctors, Nurses and Pharmacists but I suppose the doctor will be handling at times matters of life and death and I am not sure how accountancy can be measured in the same level of magnitude.

On the other hand Solicitors or Notaries may compare closely in that they are broadly administrative at a highly technical level.  The law prevents anyone calling them selves Solicitors unless they are indeed formally qualified so what has happened to accountancy?

May be historically Accountancy had an indirect protection until 2002 when almost any companies were required to have their accounts audited which can only be performed by qualified accountants and this might have been the reason why historically the CCAB bodies never pushed hard enough to protect the term Accountant(s).

The last big push probably was during the time when the word Accountant was regulated in Ireland but it failed because the word Chartered was already regulated.

I am not sure which land the law makers live in.  The land where I roam, which I consider houses fairly astute population and it would not be an exaguration to say that 75% of the population would not be able to tell the difference between Chartered Accountants and another chap calling himself Accountant.  Further more those 25% who probably thinks or is aware that Chartered Accountants are more formally trained, two third would think that if someone trades with a title Accountant they must be qualified and trained.

I think if a national survey were undertaken, the figures would probably not be too far from my guess and were they strongly asserted to the law makers.

But then the current Labour goverment agenda is to deregulate hence it may be that a change in government would be the right time to lobby.

HMRC appears to be concerned about the quality or work from a small number of agents.  I have no problem with that.

Can I ask if it intends to tackle the growing problem of inaccuracies and delays within its own organisation ?  No longer can you rely on anything received from HMRC.  Does anyone get any technical training within the organisation anymore or have they all taken early retirement ?

The rubbish I have been told on the telephone sometimes is amazing.