Landlords who use advisors to file their tax returns must ensure they comply with new mandatory HMRC registration requirements from May – or penalties of up to £10,000 may be imposed.
The new regulations mean that from May, their tax advisors must register with the HMRC, replacing a previous voluntary requirement to do so. They are not allowed to interact with HMRC on behalf of their client if they are not registered and will face sanctions if they do so.
It covers any interaction with HMRC, including contact by telephone, post, email or online messaging. It also applies if such advisors file any returns, claim or other document with them on behalf of a client. It means that almost any firm providing tax advice or services must now register.
Rick Schofield, a tax partner at accountancy and business advisory firm Azets, said the changes could trip up many in the property sector. “There are going to be some costly errors made by unsuspecting organisations or individual sole traders who assist other people with their tax affairs,” he said.
“This compliance shake-up is going to catch a lot of people out, the good as well as the bad, such as when it comes to stamp duty returns or chasing a PAYE code.”
Schofield criticised the government for not providing more advice about the new system. “Everyone is looking to HMRC for an exhaustive dos and don’ts list but nothing is forthcoming yet, adding to a sense of filing doom from May. People just want clarity and guidance.”
According to HMRC, the policy “ensures all tax advisers interacting with HMRC on behalf of their clients meet minimum standards”; that the changes “will improve HMRC’s ability to monitor and exclude tax advisers who are objectively unable to meet HMRC’s Standards for Agents or cannot lawfully act as a tax adviser”.
The digital registration requirement begins in May, with an initial transitional period of at least three months. There will be a non-digital alternative for those who are digitally excluded.
Self-employed landlords who are individual taxpayers can also be indirectly affected. He said: “Individual taxpayers may be affected if their tax advisers are no longer able to act on their behalf because they are either unable to satisfy the new registration requirements imposed on (UK-based and overseas) tax advisers, or if their tax adviser is subject to sanction.
“You may see individual taxpayers left in expensive limbo, and facing late penalty fines, if their agents decline to send documentation to HMRC for whatever reason.” to send documentation to HMRC for whatever reason.”
This article is taken from Landlord Today