Understanding HMRC’s view on intermediaries: what accountants need to know

HMRC has published a document outlining its approach to intermediary harm. This guidance provides clarity on what constitutes responsible intermediation and highlights behaviours that may be considered harmful. For accountants, this is a useful reference when advising clients or referring them to third-party providers.

What HMRC means by ‘intermediary’

An intermediary is defined as any individual or business that acts between taxpayers and HMRC. This includes:

• Tax advisers (e.g. accountants and bookkeepers)
• Repayment agents
• Software providers
• Employers and umbrella companies (PAYE)
• Contractors under the Construction Industry Scheme (CIS)
• Financial organisations and advisers
• Pension scheme administrators

HMRC recognises that most intermediaries provide value and support the effective administration of the tax system. It works with professional bodies and industry leaders to encourage high standards across the sector.

Harmful behaviours to be aware of

A minority of intermediaries engage in practices that HMRC considers harmful. These include:

• Misleading advertising
• Exploiting HMRC systems (i.e., using them in ways that were not intended)
• Creating arrangements that result in additional tax, interest, or penalties for taxpayers

Such behaviours can undermine HMRC’s ability to administer the tax system and expose taxpayers to financial risk.

HMRC’s response to harmful practices

HMRC uses a range of powers to address harmful intermediary behaviour, including:

• Blocking access to HMRC services
• Reporting misconduct to professional and enforcement bodies
• Publishing the names of individuals promoting tax avoidance schemes
• Pursuing criminal action in cases of fraud
• Conducting risk analysis to identify emerging issues
• Strengthening internal systems to prevent misuse
• Enforcing anti-money laundering regulations
• Collaborating with external organisations such as the Police and Advertising Standards Authority

HMRC reviews its powers regularly to ensure they remain effective against evolving threats.

What taxpayers and accountants should look out for

If referring clients to a third-party provider in connection with their tax affairs, it’s helpful to remember the following red flag indicators:

• Claims of being ‘HMRC-approved’ – HMRC does not endorse any intermediary
• Requests for blank forms or HMRC login credentials
• Unclear terms and conditions, particularly around fees and authority
• Use of GOV.UK styling or government logos to appear official
• Offers that sound too good to be true – they often are

Taxpayers remain responsible for their own tax affairs, even when using an intermediary. It’s essential they understand what is being submitted on their behalf and verify all documentation before signing.

Support and resources available

HMRC provides guidance on:

• Appointing a third party to act on a taxpayer’s behalf
• Choosing a tax agent
• Software compatible with Making Tax Digital for Income Tax
• Advice for those working through umbrella companies
• Accessing helplines and reporting tax fraud or avoidance
• Registering a family member or friend as a ‘trusted helper’

To read HMRC’s full guidance, visit: HMRC’s approach to intermediary harm – GOV.UK