Tax Policy Uncertainty and Mandatory Registration for Advisors

Mark Morton discusses the shifting landscape of UK tax policy amid global uncertainty, including potential implications for the autumn budget, the concerns surrounding mandatory registration of tax advisors, and the increasing administrative burdens faced by compliant firms.

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Transcript

Hello everybody, it's Mark Morton here. Welcome to the latest podcast on the world of tax tax going up. And as we sit here at the moment watching what is going on in the Middle East it doesn't make you wonder about where we'll end up with taxation policy in the autumn budget. It was quite interesting yesterday. 

Seeing the Prime Minister trying to say that fuel duty is not going up well that is precisely what the chancellor said in the last budget because and from September in instalment. So whether that will proceed, but clearly what is going on at the moment, if it lasts any time will affect all sorts of things including taxation policy. 

I think the rather scary thing, looking at the. Spring forecast is if you project forward five years. Although we are raising more than we've ever raised in tax before, we're also spending more than we've ever spent before, and hence the difference. Between income and expenditure really doesn't change much in cash terms, so we'll still be borrowing tremendously based on forecast that came in prior to what is going on in the Middle East. 

It is not a tremendously optimistic position in which the country finds itself at the moment. Having said that, on an upbeat note, we then talk about the registration, the mandatory registration of tax advisors now. A bit like MTD, those of you who have watched lectures or whatever over the last few years, you will know my views on MTD. 

It's a, it's an HS two project. It will never do what it was designed to do. It puts small businesses to a lot of extra costs for what precisely. I'm still not clear and I'm, I'm amazed that the profession is sleep walked into it. To be quite honest. I think the institutes are somewhat culpable, but there we go. 

But the mandation of Regi, mandatory registration of tax advisors is one of those other things where you think would you know, and the point is what precisely, so of course, what's essentially being said is if you are registered. Sorry. Unless you are registered with HMRC, you are not supposed to act, interact with HMRC, but the net result of not registering and interacting seems to be if they catch you, they might stop dealing with you. 

Now that strikes me as rather odd. Because when I look back over my career, I have seen instances where HMRC have come across dubious firms, and I've just said we're not having anything to do with you anymore. We will not, deal with returns that you submit, et cetera. So the actual recourse of the revenue. 

Doesn't really seem to change much. So I don't see a lot out there to say, if you're a really dodgy firm doing really dodgy things, keep submitting stuff, and by the time the revenue say we're not dealing with you, you change your name and start again. So quite what this is designed to achieve is not clear. 

Of course. If you then turn it on its head and look at the majority of. Firms who are compliant, they then have an extra layer of bureaucracy to go through. It appears from what the revenue is saying and this does not match the law or the draught legislation I should say 'cause it's currently going through Parliament. 

What the revenue seem to be saying. If you are already have an agent services account. Then you won't need to do anything in the short term. They will contact you with the information they require. So I would guess the majority of people working for firms out there will, in the short term, not actually have to do anything as such because the revenue said they will be in touch. 

What you then find, depending on the size of firm, is basically you will have to give named individuals, directors, partners but then this broader concept of relevant individuals, people who are significantly involved broadly in, in the tax affairs, the tax process of that particular firm. The difficulty at the moment is understanding in any given firm. 

What is significant involvement in the management? The organisation of, just because you are a manager of a tax department in one of the Big four does not mean you are significantly involved in the operation of that process. If you extrapolate that down to a smaller firm, they may be, in essence, toward intents and purposes, a partner stroke director in terms of what they do. 

And yet they don't have that formal title. So I think the main complexity at the moment is. Where does that relevant individual point sit? If they are relevant individuals, then the sort of underlying background to that is then for that firm to operate, they must be up to date with their tax payments and they must be up to date with their tax returns and so on. 

Which is a pretty obligation, pretty heavy obligation to be drawn into as a salaried employee, one would imagine. And of course then how would the firm know? They'd have to ask the employee who says it's nothing to do with you. That's my stuff. It really is, in my mind, a bit of a mess, bearing, bearing in mind it's supposed to start the 1st of May. 

Having said that, of course, with MTD, the revenue are amending their guidance and almost daily, but that's supposed to start in April. So I suppose, the registration tax advisors is miles away in that sense. But keep an eye on it. I suspect it will be a bit of a developing theme. I think to be fair, most of the institutes have been pretty critical of the drafting of this because of the lack of clarity, primarily I think, on who relevant individuals are. 

And of course, come back to the original point that I made. What is the ultimate recourse to the revenue? Actually we won't deal with you anymore. So I can't get very excited about it, if I'm quite honest. This is just another layer of bureaucracy. I think the real issue in my mind is, is this just a start of a 10? 

And actually will you find having implemented the system, then you do start to see serious financial penalties and so on and so forth. But that is not the situation as it currently stands. Anyway, on that happy note. Yes, welcome to the world of Tax for spring and in two weeks, who knows what will have happened tax wise. 

Take care everybody. I shall speak to you again soon.