Does your tax agent ask for too many refunds?

SA100 tax return form with calculator and pencil lying on table

High Volume Agents (HVAs) deal with large numbers of clients, often for a short time only, and make repayment claims or submit returns that generate repayments.

HVAs usually

  • provide services on a commission or ‘no repayment no fee’ basis
  • target clients in a specific trade or industry, for example the construction industry
  • submit high numbers of repayment claims relating to expenses incurred in their clients’ employment or trade
  • receive the tax repayment as a nominee for their client
  • are not members of a professional taxation accountancy body, although some of their staff may hold professional qualifications
  • have little or no face to face contact with their clients as much of their business is carried out electronically.

A repayment claim can be made using any of the following

  • P87
  • stand alone claim by correspondence
  • Self Assessment tax return
  • unsolicited return.

The range of expenses claimed that results in a repayment usually include

  • travel
  • subsistence
  • overnight accommodation
  • cost of food
  • use of home
  • wife, civil partner or relative’s wages
  • cost of tools
  • protective or specialist clothing
  • laundry
  • telephone costs.

Further details in CH820000

HMRC have targeted firms with as few as 30 clients! so don’t think it only applies to large scale operations

HMRC are particularly interested in claims where the expenses are more that 10% higher than the income.

An agent’s poor technical ability that puts tax at risk will generally fall into one or more of the following categories

  • bookkeeping or accounting errors
  • computational errors
  • lack of tax knowledge or expertise
  • unreasonable or untenable technical views.

HVA’s are asked to enter into a memorandum of understanding agreements which are designed to check clients are paying the correct tax, in general this is likely to result in higher tax payments.

So be careful who you ask to be you agent! your tax saving might be short lived.


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