Authorised Agent??

dantray Registered Posts: 72 ? ? ?
A while back a friend of mine began work as a self employed CIS subcontractor, taking on bits of work from his then current employer, and asked me would I complete his self assessment, which I said I would do for free as

a) he's a mate,
b) his self employment only began on 15th March,

and more importantly;

c) I need my kitchen boarding and skimming next month - and he's just become my go-to guy!

It now appears as though my friends former employer (now contractor) has passed on his information to his own accountant, who have completed the self assessment on my friends behalf, applied to HMRC for his (£142) rebate to be paid directly to them, and invoiced him £120 for the service stating this will be deducted from the rebate before the balance being paid to him.

My friend has since received a letter from HMRC advising that an application for a rebate has been processed and this will be paid to the agents account by bank transfer, stating the agents company on the letter.

Included in the paperwork that the accountant has sent to my friend is a 64-8 form for him to fill out and complete.

So my question is: How on earth has this accountant managed to request a payment from HMRC to bepaid directly to them, if they have never received a 64-8 from my friend? More importantly, why are HMRC making a payment to an agent for whom they have no authority to do so?

Or will HMRC keep hold of the rebate until the 64-8 is received before releasing the funds to the accountant? In which case I'll file my own 64-8 (which I'll be doing anyway) and prepare the return myself, but that leaves the clients records with his contractors accountant and I very much doubt they are going to let them go until they've received a payment for £120, in which case my mate should just let the accountant file the return anyway.

Has anyone else had this experience? or do you possibly adopt these practices? It's not something I have seen before and I have worked in a few practices now over the years.



  • jamesm96
    jamesm96 Registered Posts: 523
    Sounds to me like the other accountant has rather jumped the gun! Does your friend (I'll call him Jim!) want the other accountant (we'll call them A & Co) to do it or does he still want you to?

    Issues as I see it are:

    1. Jim hasn't signed an engagement letter with the other accountants nor was a fee agreed

    2. This (point 1.) being the case, A & Co have no right to exercise a lien over the records... etc.

    3. A & Co appear to have prepared a tax return without any input from the client as to expenses... etc (I'm sure they'll have had full detail of Jim's income, but there must be expenditure which they didn't know of?)

    4. A & Co appear to have submitted a tax return which was not signed by the taxpayer.

    With all of the above in mind, I'd say that you should have no difficulty making some threats to A & Co on the basis of their lack of professional conduct and professional ethics and having them credit the fee in full and pass on all of the records they hold. You can submit and amended return to HMRC.

    Re. the repayment, I would hope that HMRC would stop the payment during their security checks because of having no authority; I've certainly had it happen to us on occasion.

    I wonder, though, is it just possible that Jim might have signed a few 64-8 / engagement letters without realising what he was signing? Perhaps thinking it was something that his contractor just required?

    Hope this helps,

  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Unless "Jim" has signed the page on the return authorising the refund to go to the Agent, or another similar document, then the agent has no right to it.

    HMRC don't know that and assume there is a signature - the return is submitted electronically so the refund gets processed automatically to the bank details on the return.
  • mc25
    mc25 Registered Posts: 232 ? ? ?
    I agree with Monsoon on this one, HMRC cannot pay this amount the the accountant unless authorised. Good luck

    ******post Edited***** @ Monsoon what you have explained is correct and is what I meant was just trying to shorted my post when I originally posted it and was rushing too yes they can pay to whoever submits the return if information is provided but the Accountant shouldn't do this if no authorization is in place.. Sorry
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    mc25 wrote: »
    I agree with Monsoon on this one, HMRC cannot pay this amount the the accountant unless authorised. Good luck

    That's not what I said. HMRC will pay what they are told to pay by the person filing the return.
    The accountant is in the wrong if they don't have authorisation, but that won't stop HMRC paying it.

    Edit: thanks MC25 that's just what I meant :)
  • dantray
    dantray Registered Posts: 72 ? ? ?
    I have asked Jim about this over the weekend. He says he has never spoken to the accountant, and his employer turned contractor (say ABC Ltd) has passed them over without knowing.

    It may be that the accountant has asked ABC Ltd and he has assumed that Jim would want them to complete the return. In which case another concern I have is potentially damaging Jims relationship with ABC Ltd should he refuse (rightly so in my opinion) to pay the amount charged by A & Co.

    If A & Co turn to ABC Ltd for payment of work carried out, is it really worth Jim annoying the company who sends him £000's of work each month for the sake of £120, and potentially damaging ABC Ltd's relationship with their advisor (albeit seemingly unprofessional)? I think not.

    With regards to the expenses, I don't believe there will be many at all in those two weeks of the year, his employer even carried on picking him up in the morning, and dropping him off.

    This whole thing stinks if I'm being honest. His boss clearly requested he go self employed to escape paying ER NI and I've advised Jim to distance himself from ABC Ltd, start buying own materials, tools, etc. I've explained the implications he may face should his employment status be examined too.

    I'll be speaking with the Revenue about it this evening to try and stop the payment being released but we'll see what happens.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    Sounds dodge. Good luck!

    £120 is a good price, but not as good as the free you were offering! :lol:
  • groundy
    groundy Registered Posts: 495
    dantray wrote: »
    I've advised Jim to distance himself from ABC Ltd, start buying own materials, tools, etc. I've explained the implications he may face should his employment status be examined too.

    To be honest the implications on Jim are minimal, if employment status is disputed then it is ABC ltd that will have to deal with HMRC. Worst case scenario for Jim is that he becomes an employee once again. The purchase of own tools and materials is not sufficient to argue self employment.
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