HMRC's '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’.
Members of the professional tax and accountancy bodies all automatically sign up to the Professional Conduct in Relation to Taxation (PCRT) which is a stronger standard than HMRC's Standard for Agents.
HMRC's Standard is being strengthened to create more transparency in the tax advice market for customers, following consultation.
Agent standards
HMRC says that its Standards expect:
"Integrity
We expect agents to be straightforward and honest with HMRC, for example:
- Disclose all relevant information.
- Don’t imply that you’re regulated for tax by HMRC.
Professional competence and due care
We expect agents to:
- Keep correct and up to date knowledge of the areas of tax that you deal with.
- Work to prevent errors in your clients’ tax calculations or claims.
- Advise your client to take steps to set matters right where you find errors in their tax affairs.
- Keep online access credentials safe from unauthorised use at all times.
Professional behaviour
We expect agents to:
- Comply fully with tax law and regulations.
- Ensure your own tax affairs are correct and up to date.
- Deal courteously and professionally with staff.
- Consider the risk to reputation of tax agents, of any arrangements that you advise a client about - for example, tax planning schemes."
PCRT
- Seven accountancy and tax professional bodies share a standard known as ‘Professional Conduct in Relation to Taxation’ (PCRT).
- If agents meet the PCRT standard, HMRC does not envisage that this, much briefer, summary of certain important principles will place further requirements on them.
- HMRC will continue to work with professional bodies to agree a single common standard for all agents.
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?
External link