What do you do if you receive one of HMRC's 'One to Many' letters to agents? The letters should not be ignored. We have put together a step-by-step guide to handling HMRC's one-to-many agent letters and understanding your responsibilities as an agent.
In July 2024, HMRC issued one-to-many agent letters to 800 tax agents, requesting them to review their clients' 2022-23 tax returns and make Voluntary amendments where appropriate.
The agent letters have been issued where HMRC has identified inconsistencies between the clients' 2022-23 Self Assessment tax returns and HMRC's P11D, P14, and High-Income Child Benefit Charge records.
In contrast to HMRC's usual approach, which is to send the one-to-many letter directly to the taxpayer and a copy to the authorised agent, the letters have been addressed directly to the clients' authorised agents. This means that clients will not be aware that HMRC is asking about their tax affairs unless or until the agent tells them.
- The letter is not a formal enquiry or Compliance check.
- The CIOT has recently issued guidance for members, highlighting the responsibilities and duties of agents when dealing with these letters. We have detailed the key considerations below.
What should you do if you receive a one-to-many agent letter?
Step 1: Identify the affected clients
- The letters do not identify specific clients.
- HMRC will contact you (the agent) to provide a list of clients with details of potential discrepancies.
- Alternatively, you can contact HMRC using the phone number or email address provided at the top of the letter.
- If you choose to communicate via email, you must follow the ‘Corresponding with HMRC by email' guidance and provide written confirmation that you and your clients:
- Understand and accept the risks of using email.
- Are content for financial information to be sent by email.
- Are content for you to receive attachments.
- To provide these confirmations, you must identify which clients are affected by the agent letter. You may need to request a list of clients from HMRC beforehand. The only exception is if all your clients have already given acceptance i.e. through a suitable clause in the engagement letter.
- If you choose to communicate via email, you must follow the ‘Corresponding with HMRC by email' guidance and provide written confirmation that you and your clients:
Step 2: Advise affected clients and obtain permission to make disclosure
The letters will usually be categorised as an informal request. You should use the guidance set out in Professional Conduct in Relation to Taxation (PCRT) and in particular Helpsheet D. You will need to:
- Advise each affected client that they have received an informal information request (the agent letters are not being sent or copied to the client).
- Inform clients that in addressing the informal request, it is covered by fee insurance or requires an additional fee and/or a new engagement letter.
- Check if there is an error in the 2022-23 tax return and discuss with each client how to respond to the request.
- Obtain the client's permission to make a voluntary disclosure and/or amend the return.
- Sometimes engagement letters will provide authorisation for routine disclosure.
- If you have any doubts, you should ask your client to approve any disclosure and consider whether dealing with the agent letter will require a separate engagement letter.
- There is no obligation to comply with an informal request. However, agents should advise the client whether it is in their best interests to disclose such data.
- If HMRC do not receive voluntary amendments for affected clients, they have confirmed that they will review each case and take the relevant enquiry action.
- A lack of cooperation may have a direct impact on Penalty negotiations if errors are later found, penalties are likely to be issued at the higher 'Prompted' disclosure rates.
- If a decision is made not to respond to HMRC’s letter, this decision and the reasons for the decision should be clearly documented for each client concerned.
- The deadline to make voluntary disclosure and amend the 2022-23 returns, is 31 January 2025.
- If you consider that it is not feasible to meet this deadline, it is recommended that you work with HMRC to agree a more realistic deadline for responding to the letter.
Step 3: Inform HMRC of the voluntary disclosures and/or amendments to 2022-23 tax returns
- HMRC has requested that agents email HMRC a spreadsheet showing:
- Which returns you’ve amended.
- Any returns you haven’t amended and why.
- To protect client confidentiality, consider sending a response to HMRC in a different format, for example responding individually for each client.
Clients’ confidentiality
- Agents should consider compliance with confidentiality, which is one of the fundamental principles in PCRT.
- Client files must not contain details of other unconnected clients.
- You may be required to copy and redact the information provided by HMRC before placing it on a client file.
- HMRC will often provide a redacted client list, even though partially redacted, several clients' details will be contained within one list.
- Steps should be taken to ensure that records and working papers are maintained securely and the clients' confidentiality is protected.
What if you no longer act for the affected client?
- Where an informal request is received for a client that you no longer act for you have the duty of confidentiality.
- You should refer HMRC either to the former client or if authorised by the client to their new agent.
Useful guides on this topic
Time limits for tax assessments, claims and refunds
What are the time limits for claiming a tax refund? How far can HMRC go back and raise an assessment? How many years back can a taxpayer appeal? What are the time limits for correcting a tax return?
P11D: Reporting benefits and expenses
How do you report benefits and expenses? What is the P11D deadline?
P11D and P11D(b): Index
Useful links to forms and notes concerning P11Ds.
High-Income Child Benefit Tax Charge
What is the High-Income Child Benefit Charge? Who pays it? Can you appeal against an assessment? Are there any useful cases from the tax tribunals?
How to work out the High-Income Child Benefit Tax charge
How do you work out the High-Income Child Benefit Tax Charge?
Compliance
This section covers HMRC powers, anti-avoidance measures, overpayments and special regimes, For guides on investigation penalty negotiation see Investigations.
Professional Conduct in Relation to Taxation
The Professional Conduct in Relation to Taxation (PCRT), adopted by the main professional accounting and tax bodies, sets out the professional standards that are expected of a member when undertaking tax work.
Penalties: Errors in Returns and Documents (subscriber version)
What penalties apply if you make an error or mistake? Is there a penalty if you fail to tell HMRC about an under-assessment? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?
External Links
HMRC One to Many Agent Letters – Guidance for CIOT Members
