HMRC have published a new third-party research report on "The Role of Professional Bodies in the regulation of Tax Agents".

Around 75% of business use a tax agent to help deal with business taxes. Anyone can set themselves up as a tax agent: the tax profession is is self-regulating and not currently regulated by HMRC. 

According to the report, 67% of tax agents are members of professional bodies which set standards for the behaviour expected of their members, such as Professional Conduct in Relation to Taxation (PCRT)

This research, which involved 45 minute interviews with senior officials of 15 professional bodies, was undertaken to provide a better understanding of:

  • Membership requirements and the role of the professional bodies.
  • How they assess the adherence of members to the agreed standards.
  • Where professional bodies believe opportunities exist for the profession to enhance its use of regulation or other means to improve the standards of tax agents.
  • The relationship between professional bodies and HMRC.

The conclusions reached by the report were that:

  • Other than statutory regulation e.g. AML supervision, the professional bodes did not think they formally ‘regulated’ their members. Most saw their role as maintaining and enhancing standards through education, with a review process such as ‘practice assurance’ or ‘monitoring’.
  • Not all of the professional bodies checked if their members adhered to professional standards. Most had a complaints procedure and reviewed whether members kept CPD up to date, with members in practice undergoing a more intensive review. The outcome of disciplinary action could be a reprimand, fines or expulsion but in all cases members who were expelled from membership on disciplinary grounds could still legally practice.
  • The professional bodies find it difficult to know who makes errors; agents in practice, those working in the private or public sectors, or agents who are not members of professional bodies. They would like HMRC to provide information about common errors made and which types of agents are making them so they can target their information and guidance and adjust their supervisory reviews accordingly.
  • What concerned many of the professional bodies were agents that were not members of a professional body and the lack of oversight over these agents.
  • The HMRC agent forums (Agent Strategy Group and Joint initiative Strategy Group) work reasonably well but there are certain limiting aspects; for example, the sense that some professional bodies are less formally recognised by HMRC than others and a sense of mistrust felt by some smaller agents.

Overall it was felt that the current system of self-regulation worked well and that current statuory supervision was sufficient but that improvement could be made by:

  • Continuing to working more closely with HMRC
  • More updates from HMRC on their views about regulation or supervision of agents not supervised by a professional body
  • Greater opportunities for the professional bodies to provide input into new policies, processes or systems that HMRC is considering implementing.

Comment

The conclusions drawn in the report are made by the third party research based on the opinions of the professional bodies consulted; HMRC has yet to comment on the findings. 

Links to our guides:

Professional Conduct in Relation to Taxation

Money Laundering Checks: know your client 

External links:

HM Revenue & Customs Research Report 539: Role of professional bodies in the regulation of tax agents

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