Our guide to HMRC's 'Standard for agents', HMRC's approach to tackling bad agent behaviour, and providing a definition of a tax adviser.
HMRC Standard for agents is a non-statutory standard, aimed at all tax agents, although largely to most tax agents who are not members of any of the professional tax and accountancy bodies.
HMRC considers that agents have a key role to play in the tax system and their role should be supported.
- As a result of years of mass marketing of tax schemes and more lately the antics of Income Tax repayment agents, the government has concluded that "there is a minority of incompetent, unprofessional and malicious advisers whose activities harm their clients, reduce public revenue, and undermine the functioning of the tax advice market."
- The Independent Loan Charge Review in 2020 made recommendations that the government should improve the market in tax advice and consider establishing ‘a more effective system of oversight, which may include formal regulation, for tax advisers’.
HMRC's Standard has been substantially strengthened since its original publication in 2016 to create more transparency in the tax advice market for customers, following consultation.
Interaction with professional bodies
HMRC expects professional body members to follow their body’s code of ethics and all agents who interact with HMRC to keep to its standard, regardless of professional body membership. If agents meet their professional body’s code of ethics, however, the HMRC standard for agents should not place further requirements on them.
Members of the professional tax and accountancy bodies now all automatically sign up to the Professional Conduct in Relation to Taxation (PCRT). This is acknowledged as setting a stronger standard than HMRC's Standard for Agents.
Professional body standards for their members
The largest UK accountancy and tax professional bodies use guidance which applies the principles of their codes of ethics in a tax context, created by seven accountancy and tax professional bodies share a standard known as ‘Professional Conduct in Relation to Taxation’ (PCRT). Other professional bodies have their own standards or codes of ethics that they require members to follow.
Codes of ethics set out the fundamental principles and standards of behaviours that all members, affiliates and students of those professional bodies must follow.
HMRC expects professional body members to follow their body’s code of ethics. We expect all agents who interact with HMRC to keep to our standard, regardless of professional body membership. If agents meet their professional body’s code of ethics, however, the HMRC standard for agents should not place further requirements on them.
The Professional Conduct in Relation to Taxation fundamental principles
HMRC recognises and endorses the Professional Conduct in Relation to Taxation guidance.
HMRC’s standard focuses on 3 of the 5 fundamental principles found in the Professional Conduct in Relation to Taxation. These are:
- integrity
- professional competence and due care
- professional behaviour
Maintaining high standards in these three principles are essential to the relationship between agents and HMRC.
The two principles not specifically covered by HMRC’s standard are objectivity and confidentiality.
Agent standards
Version: June 2023
The Standard
All agents should maintain high standards that promote tax compliance.
4.1 Integrity
We expect agents to be straightforward and honest. This includes:
- Advising HMRC if they are unable to provide relevant information because client permission has not been received.
- Responding promptly when HMRC uses information powers.
- Not suggesting or implying in any way that HMRC endorses them as an agent or that the agent is part of, or acting on behalf of, HMRC.
- Making the identity of the agent or business clear, if known by a trading name or shortened version of the legal name.
4.2 Professional competence and due care
We expect agents to:
- Maintain correct and up-to-date knowledge of the areas of tax that they deal with.
- work to prevent errors in their clients’ tax calculations or claims and avoid including figures in returns or claims which are unsubstantiated or speculative
- keep contemporary records of what they advise their clients and when they advise it
- advise their clients to take steps to set matters right when inaccuracies in their tax affairs are found — if the client is unwilling to correct matters, the agent should consider ceasing to act for them — if the agent continues to act in such cases, this could risk enabling tax evasion that may be subject to criminal investigation
- maintain the security of client information they hold
- take reasonable steps to make sure any third-party input used in the course of acting for a client (such as software or specialist advice) provides accurate results and complies with the client’s tax obligations
- report suspicions of tax fraud or evasion to HMRC where client confidentiality does not apply (read the legal requirement in section 4.3.1)
4.3 Professional behaviour
4.3.1 Legal compliance
Agents must:
- make sure their own tax affairs are correct and up to date, which includes keeping to Time To Pay arrangements that are in place
- comply fully with tax law and regulations relating to their professional activity, including registering under, and adhering to, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 — this includes reporting any relevant convictions the agent has received under schedule 3 of that legislation
- comply with the requirements of UK information law in the General Data Protection Regulation, Data Protection Act 2018
- comply with other relevant law and codes, for example, the Consumer Rights Act, the Consumer Protection from Unfair Trading Regulations, and the code drafted by the Committee of Advertising Practice
- submit Suspicious Activity Reports to the National Crime Agency in accordance with the Proceeds of Crime Act 2002
4.3.2 Interaction with HMRC
We expect agents to:
- work constructively with HMRC in investigations, enquiries and in formal and informal requests for relevant information — relevant information is determined by the context and what is reasonably required where it could affect a person’s tax position
- deal courteously and professionally with HMRC staff
- comply with HMRC online services terms and conditions when they use HMRC’s online services, including keeping online access and HMRC account credentials safe from unauthorised use at all times
- only access client data in HMRC systems by getting authorisation and viewing it through their online agent services account
- use HMRC forms where they have been prescribed or mandated or, if the agent is using their own forms, include the same information that the relevant HMRC form requires
4.3.3 Interaction with clients
Agents must:
- never ask any client to share their Government Gateway user ID and password (or digital certificate) with them
- make sure all communications and advertising material are fair, clear, accurate and do not mislead or conceal material facts
Agents should:
- make their terms of engagement for clients as clear and simple as possible, in particular:
- how the agent is to be paid for their services
- how any repayment of tax owed will reach the client and what conditions apply (if any)
- provide details of deductions that will be made by the agent from any repayment the agent handles for the client
- confirm that nominations for repayments can be withdrawn by the client at any time before the repayment is made, and HMRC has the discretion not to make payments to a nominee
- make clear the rights that both agents and their clients have to end the arrangement early or individually
- agree the terms of engagement before starting to act for the client, and get confirmation that the client accepts them
- offer clients a reasonable cancellation period during which they can cancel any agreement they have entered into
- provide clients with relevant and material information before and during their engagement
- make relevant documents and information from former clients available to their new advisers when they are entitled to see them, unless there are legal reasons why this cannot be done
4.3.4 Additional needs of clients
HMRC encourages agents to make the services they provide available and accessible to all consumers equally by identifying customers needing extra help and providing extra support and reasonable adjustments as appropriate. For example:
- consider the needs of blind or partially sighted customers
- using clear, concise language when communicating with customers
- if the client appears anxious or overwhelmed by any tax issues affecting them, tell them help and support is available on NHS mental health services website
HMRC expects agents to follow these principles in addition to the standards in section 2 when advising on tax planning.
4.4 Tax planning
4.4.1 Lawful
Agents must act lawfully and with integrity at all times and expect the same from their clients.
Agents should:
- base tax planning on a realistic assessment of the facts and a credible view of the law
- advise their clients if there is a material uncertainty in the law, for example, if it is known that HMRC’s view differs or is unknown
- advise clients clearly on the risk and costs of challenge by HMRC, and any resultant court case
4.4.2 Disclosure and transparency
HMRC expects any disclosure by agents to represent all relevant facts fairly.
4.4.3 Advising on tax planning arrangements
Agents must not create, encourage or promote tax planning arrangements or structures that:
- set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation
- are highly artificial or highly contrived and seek to exploit shortcomings in the relevant legislation
4.4.4 Professional judgment and appropriate documentation
HMRC expects agents to exercise professional judgement in applying these standards to particular client advisory situations.
Agents should keep timely notes of the rationale for their actions when seeking to follow these requirements.
External links
Tackling poor agent behaviour
HMRC notes that it can limit an agent’s access to online services, or block that access altogether.
Further action may also be considered, ranging from dialogue with the agent, through to statutory powers (including criminal investigation and prosecution).
Other action may take may include:
- Disclosure of misconduct to any professional regulatory body an agent is a member of, under section 20(3) of the Commissioners of Revenue and Customs Act 2005.
- Dishonest conduct notices and related file access notices, financial penalties and publication of any penalties imposed under schedule 38 of the Finance Act 2012.
- Refusing to deal with an agent altogether.
Following a series of consultations in March 2022 HMRC published a corporate report 'Raising standards in the tax advice market' - HMRC’s review of powers to uphold its Standard for Agents, this sets out its key principles and activities that aim to tackle poor agent behaviour.
HMRC has taken into account the principles set out in its Powers and Safeguards Review, published in February 2021, to ensure that HMRC’s powers are proportionate and are used fairly, carefully and consistently.
The following tables show which elements of the HMRC agent standard are addressed by the powers and policies covered in chapters 2, 3 and 4. Three key observations are:
- HMRC has some strong options, specific to certain situations, which can be brought to bear against non-compliance with most of the standards in the right circumstances
- existing formal powers have been designed to address specific situations and therefore lack general application to uphold every aspect of the standard. There is no universal option for tackling any breach of the agent standard
- intermediate responses, for tackling behaviours that do not trigger the high thresholds for using (for example) S.20(3) CRCA 2005 or Schedule 38 FA 2012, are limited in number and in scope
Principle: Integrity
| Standard | Engagement response(s) | Formal response (if thresholds are met) |
|---|---|---|
| We expect agents to be straightforward and honest with HMRC | Engagement and constructive dialogue | Section 20(3) CRCA 2005, Schedule 38 FA 2012, Fraud referrals |
Principle: Professional competence and due care
| Standard | Engagement response(s) | Formal response (if thresholds are met) |
|---|---|---|
| Maintain correct and up-to-date knowledge of the areas of tax that they deal with | Engagement and constructive dialogue | |
| Work to prevent errors in their clients’ tax calculations or claims, taking particular care not to include figures in returns or claims which are not sustainable | Engagement and constructive dialogue | Section 20(3) CRCA 2005, Schedule 38 FA 2012, Fraud referrals, CCOs |
| Advise their clients to take steps to set matters right where they find errors in their tax affairs | Engagement and constructive dialogue | Schedule 38 FA 2012, Public Interest Disclosures |
| Comply fully with data protection law and regulations, including keeping online access credentials safe from unauthorised use at all times | Engagement and constructive dialogue, Suspension of agent online services access | Refusal to Deal With, Public Interest Disclosures |
| Maintain the security of their systems and their HMRC account credentials against current threats | Engagement and constructive dialogue, Suspension of agent online services access | Refusal to Deal With |
Principle: Professional behaviour
| Standard | Engagement response(s) | Formal response (if thresholds are met) |
|---|---|---|
| Comply fully with tax law and regulations relating to their professional activity, including the MLRs | Engagement and constructive dialogue, Suspension of agent online services access | Section 20(3) CRCA 2005 MLR enforcement, where relevant |
| Ensure that their own tax affairs are correct and up to date | Engagement and constructive dialogue, Suspension of agent online services access, Publishing Details of Deliberate Defaulters | Tax compliance powers (not reviewed in this paper), Public Interest Disclosures |
| Deal courteously and professionally with HMRC staff | Engagement and constructive dialogue | Refusal to Deal With, Public Interest Disclosures |
| Have clear terms of engagement with their clients | Engagement and constructive dialogue |
Principle: Lawful
| Standard | Engagement response(s) | Formal response (if thresholds are met) |
|---|---|---|
| Agents must act lawfully and with integrity at all times, and expect the same from their clients | Engagement and constructive dialogue, Suspension of agent online services access | Refusal to Deal with, Schedule 38 FA 2012, Fraud referrals, Public Interest Disclosures |
| Tax planning should be based on a realistic assessment of the facts and a credible view of the law | Engagement and constructive dialogue | Responses in accordance with Promoters Strategy e.g. DOTAS, POTAS, Enablers legislation, Schedule 38 FA 2012, Public Interest Disclosures |
| Agents should advise their clients where there is a material uncertainty in the law. The risk and costs of challenge by HMRC, and any resultant court case, should be made clear to clients | Engagement and constructive dialogue | Responses in accordance with Promoters Strategy e.g. DOTAS, POTAS, Enablers legislation, Schedule 38 FA 2012, Public Interest Disclosures |
Principle: Disclosure and Transparency
| Standard | Engagement response(s) | Formal response (if thresholds are met) |
|---|---|---|
| HMRC expects any disclosure by agents to represent all relevant facts fairly. | Engagement and constructive dialogue | Schedule 38 FA 2012, Public Interest Disclosures |
Principle: Advising on tax planning arrangements
| Standard | Engagement response(s) | Formal response (if thresholds are met) |
|---|---|---|
| Agents must not create, encourage or promote tax planning arrangements or structures that set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation | Engagement and constructive dialogue | Responses in accordance with Promoters Strategy e.g. DOTAS, POTAS, Enablers legislation, Section 20(3) CRCA 2005 |
| Agents must not create, encourage or promote tax planning arrangements or structures that are highly artificial or highly contrived and seek to exploit shortcomings in the relevant legislation | Engagement and constructive dialogue | Responses in accordance with Promoters Strategy e.g. DOTAS, POTAS, Enablers legislation, Section 20(3) CRCA 2005 |
Principle: Professional judgment and appropriate documentation
| Standard | Engagement response(s) | Formal response (if thresholds are met) |
|---|---|---|
| HMRC expects agents to exercise professional judgement in applying these standards to particular client advisory situations | Engagement and constructive dialogue | Schedule 38 FA 2012, Public Interest Disclosures |
| Agents should keep timely notes of the rationale for judgements exercised in seeking to keep to these requirements | Engagement and constructive dialogue |
Who is a Tax Adviser?
Who or what is a tax adviser? Does it matter
A tax adviser can be an individual or a firm.
Research undertaken in 2021 indicated that professionals prefer the definition provided by The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) regs 2017 (as amended by the Money Laundering and Transfer of Funds (Amendment) Regulations 2019, as follows:
Auditors and others
11. In these Regulations—
(d) “tax adviser” means a firm or sole practitioner who by way of business provides material aid, or assistance or advice, in connection with the tax affairs of other persons, whether provided directly or through a third party, when providing such services.
A tax adviser is also referred to as a 'tax agent" by HM Revenue & Customs.
A tax agent, is also defined in the Dishonest tax agent penalty legislation (schedule 38 of Finance Act 2012) as follows:
(1) A “tax agent” is an individual who, in the course of business, assists other persons (“clients”) with their tax affairs.
(2) Individuals can be tax agents even if they (or the organisations for which they work) are appointed—(a) indirectly, or (b) at the request of someone other than the client.
(3) Assistance with a client's tax affairs includes— (a) advising a client in relation to tax, and (b) acting or purporting to act as agent on behalf of a client in relation to tax.
(4) Assistance with a client's tax affairs also includes assistance with any document that is likely to be relied on by HMRC to determine a client's tax position.
(5) Assistance given for non-tax purposes counts as assistance with a client's tax affairs if it is given in the knowledge that it will be, or is likely to be, used by a client in connection with the client's tax affairs.
Small print & Links
Raising standards timeline
Budget 2023: Raising standards in tax advice
March 2023: It was confirmed at the 2023 Spring Budget that Spring Finance Bill 2023 will include measures to ensure that, from 15 March 2023, taxpayers can no longer legally assign their Income Tax repayments to a third party such as an agent.
Strengthened Standard for Agents
January 2023: Following a consultation on raising standards in tax advice and protecting customers claiming tax repayments, HMRC will strengthen their ‘Standard for Agents’ and set new rules for tax refund agents. These are to ensure that their customers do not accidentally sign up to unfair contract terms, which can allow the tax agent to claim a large cut of any tax refund claimed.
Tax Agents: Raising standards in the tax market
November 2021: HMRC has published a Summary of responses ‘Raising standards in the tax market: professional indemnity insurance and defining tax advice’. HMRC has no plans to introduce compulsory PII but new measures must ...
Consultation: Raising standards in the tax advice market
March 2021: HMRC have published a consultation on the requirement for anyone providing tax advice to hold professional indemnity insurance. The consultation will also consider the definition of tax advice.
Raising standards in the tax market: next steps
November 2020: HMRC published ‘Raising standards in the tax advice market, Summary of responses and next steps’ in November 2020. It aims to raise standards, work with the professional tax bodies and root out advisers who are incompetent and those who actively bend or break the rules.
Call for evidence: Raising standards in the tax avoidance market
July 2020: HMRC opened a new call for evidence ‘Raising standards in the tax avoidance market’ which seeks suggestions on how to raise and maintain high standards of competence and behaviour in the tax advisory market.
Useful guides on this topic
Professional Conduct in Relation to Taxation
At a glance' guide to the requirements of the Professional Conduct in Relation to Taxation (PCRT) adopted by the main professional accounting and tax bodies.
Tax Penalties for accountants, advisers and tax agents
What tax-related penalties can apply to accountants, advisers and agents?
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