HMRC has published its finalised policy on enforcing higher standards on tax advisors, including reforms to the currently unregulated repayment agent sector.

The changes follow a consultation in June 2022, which drew attention to abuses by some repayment agents. The sector is currently unregulated and complaints have been reported that taxpayers who appointed an agent have found it difficult to withdraw from their agreement if they became dissatisfied or wanted to manage their own affairs.

As a result, legislation is to be introduced to stop the use of binding assignments of income tax repayments that could only be cancelled  if the agent and taxpayer both agreed to do so. In future, taxpayers who choose to use a repayment agent to reclaim overpaid tax and want the rebate to be sent to the agent will have to make a nomination to HMRC, which they can cancel at any time. Moreover, repayment agents will have to register with HMRC and be more transparent with clients, including mandatory pre-contractual disclosure forms and a 14-day ‘cooling-off’ period for customers.

The new transparency requirements are included in the revised HMRC Standard for Agents, which specifies that agents will have to provide more evidence that a claim has been made with the customer’s consent.