What penalties can HMRC charge for Tax Agents found guilty of Dishonest Conduct? How can you appeal penalties?

This is a freeview 'At a glance' guide

Finance Act 2012 introduced legislation for Tax Agents: Dishonest conduct. It provides HMRC with powers to enable HMRC to investigate agents who are engaged in dishonest conduct and assess penalties.

At a glance

HMRC may charge tax penalties for tax agents found guilty of dishonest conduct where an agent's behaviour results in a loss of tax.

The rules:

  • Apply from 1 April 2013.
  • Were introduced by Schedule 38 Finance Act 2012.
  • Charge civil penalties of up to £50,000.
  • Replace the sections 20A TMA 1970 provision: “Power to call for tax papers of a tax accountant” and s.99 "Assisting in the preparation of incorrect return etc".

HMRC may:

  • Investigate dishonest conduct by tax agents.
  • Request a tax agent's files and documents.
  • Charge civil penalties where an agent fails to comply with an information request.
  • Charge penalties for dishonest conduct.
  • Publish the details of agents who are penalised.

Who is a tax agent?

A tax agent is an individual who, in the course of business, assists other persons (clients) with their tax affairs.

An individual can be a tax agent 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.

Assistance with a client’s tax affairs includes:

  • Advising a client in relation to tax, and
  • Acting, or purporting to act, as agent on behalf of a client in relation to tax.
  • Assistance with any document that is likely to be relied on by HMRC to determine a client’s tax position.

Assistance given for non-tax purposes will be counted as being for tax purposes 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.

  • The type of work of advisers from surveyors or valuers to accounting clerks and bookkeepers may result in them being deemed tax agents.

What is “dishonest conduct”?

Doing something dishonest with a view to bringing about a loss of tax revenue.

It does not matter whether:

  • there is an actual loss
  • the agent was acting under the client’s instruction.

A loss of tax arises from tax evasion, including:

  • Accounting for less tax.
  • Obtaining a tax relief, or advancing a tax relief.
  • Deferring timings of tax liability.

“Doing something dishonest” includes:

  • Dishonestly omitting to do something, and
  • Advising or assisting a client to do something that the individual knows to be dishonest.

Establishing dishonest conduct and appeal

  • HMRC issue a determination which is described as a 'conduct notice'.
  • The individual may be fined or imprisoned if any documents are destroyed or concealed following the issue of a conduct notice.
  • An individual has 30 days to appeal to the officer who gave the notice and must state their grounds for appeal.
  • On an appeal that is notified to the tribunal, the tribunal may confirm or set aside the notice.

Power to obtain a tax agent’s files 

An agent’s files include working papers and any other documents received, created, prepared or used by the tax agent for the purposes of or in the course of assisting clients with their tax affairs. 

The tribunal may approve a 'file access notice' which requests a document holder to disclose documents in their possession or power, following:

  • The issue of a conduct notice which is not appealed or where an appeal is made and withdrawn.
  • The conviction of the individual of fraud or dishonesty since becoming a tax agent provided it is not appealed or where an appeal is made and withdrawn, or the conviction upheld.

Where a document-holder is other than a tax agent, they have 30 days to appeal against a file access notice.

Penalties: file access

Failure to comply with a file access notice: £200, followed by £60 per day.

The defence of 'reasonable excuse' applies in the case of failure to supply information.

Penalties: dishonest conduct 

HMRC has flexibility, it may reduce a penalty, stay a penalty or agree a compromise. 

  • Penalties range from £5,000 to £50,000.
  • The £5,000 minimum is subject to a special reduction which may reduce it to nil.
  • Penalties are reduced according to behaviour in respect of the quality of any disclosure whether the disclosure was prompted or unprompted.
  • For penalties of £5,000 and higher HMRC may also publish details of the individual.


  • An individual may appeal a penalty, within 30 days.
  • The tribunal may reduce a penalty, stay a penalty or agree a compromise.

Double jeopardy

A person is not liable to any penalty for dishonest conduct in respect of anything for which they have been convicted of an offence.

A person is not liable to a penalty for dishonest conduct in respect of anything for which the person is personally liable to a penalty under:

  • Sch 24 FA 2007: penalties for errors.
  • Sch 41 FA 2008: penalties for failure to notify.
  • Sch 55 FA 2009: penalties for failure to make a return.


In Colin Rodgers v HMRC [2018] TC06617, the First Tier Tribunal (FTT) dismissed the tax adviser's appeal against a Conduct Notice. The agent admitted helping his client reduce his VAT and Income Tax liabilities by creating false purchase invoices.


Measures introduced Finance Act 2012.

HMRC published a new discussion document on "Working with Tax Agents: Dishonest Conduct" in July 2011. The consultation ended in September 2011.

Oak ad
Are you enjoying our content? 

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter.