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 reached a conclusion 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 orginal 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 sevent 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 3 principles are essential to the relationship between agents and HMRC.

The 2 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

HMRC's Standard for Agents