HMRC have 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.

At a glance

The government recognises that anyone can set up as a tax adviser. Whilst those who are members of a professional body maintain professional competency and sign up to codes of conduct e.g. the Professional Conduct in Relation to Taxation (PCRT):

  • Not all professional bodies include the PCRT in their standards.
  • Not all of those who provide tax advice are members of a professional body and some do not interact with HMRC on a regular basis.
  • There is no standard competency requirement or code of ethics except the HMRC Standard for Agents, which mirrors the PCRT.

Prior to launching the call for evidence, HMRC held informal discussions with interested stakeholders over a two-year period. The aim of the call for evidence is to ensure:

  • Better market transparency to give taxpayers the information they need to choose an adviser who meets their needs and who is an appropriately competent professional who maintains high ethical standards and to avoid anyone who is unsuitable.
  • Better compliance with the tax rules.

HMRC proposes to do this by exploring, through the call for evidence, a consultation on disguised remuneration schemes and round table discussions:

  • What tax advice and tax services mean.
  • How good tax advisers add value and the reasons for and impact of poor adviser behaviour.
  • How to protect consumers in the tax advice market.
  • The impact of government intervention on the tax advice market.
  • Worldwide examples of regulation to raise standards, especially in countries requiring tax advisers to register with a statutory regulator e.g. Australia, Germany and Czech Republic.

Six different options are suggested by the call for evidence:

  • Option A: Better use of HMRC’s or government’s current powers.
  • Option B: Improve rights of recourse for consumers.
  • Option C: Improving transparency - helping consumers to make better choices.
  • Option D: Penalties for tax advisers.
  • Option E: maximising the regulatory/supervisory role of current professional bodies.
  • Option F: External regulation.

Due to the COVID-19 pandemic, the deadline for the call for evidence is extended to 28 August 2020 and responses should be sent to: This email address is being protected from spambots. You need JavaScript enabled to view it.

Links

Professional Conduct in Relation to Taxation

External link

‘Raising standards in the tax avoidance market’: call for evidence

Consultation questions

  1. Is the HMRC Standard for agents comprehensive enough to provide a baseline standard for all tax advisers?
  2. What clear distinction can be drawn between tax advice and tax services?
  3. From your professional point of view, how do standards differ between different types of tax advice? Could you provide examples?
  4. Please share any data which would help develop assumptions on the market share, volumes or impact or on the value added by different sectors of the market?
  5. What more could the government do to promote the work of good advisers?
  6. Where else do good agents add value - for customers, HMRC and the wider economy? How could this be extended further?
  7. What are the general characteristics of good and bad advisers? Questions on the impact of poor advisers.
  8. Are there any parts of the tax advice market where there are particular problems? Please share any evidence you have.
  9. Do you have any evidence about the impacts of unqualified agents or agents that don’t meet standards?
  10. How could HMRC and the professional agent community work together to identify poor practice at an early stage? 
  11. How effective are HMRC’s recent interventions? Are there other interventions that the government should be using to tackle poor practice?
  12. Is there more that HMRC could do to manage agent performance through its transactional services (such as IT systems)? 
  13. How might increasing consumer protection affect individuals taking responsibility for their own tax affairs, and what behavioural changes might you anticipate?
  14. Who should take the primary role in improving consumer protection, government, the profession, or another third party?
  15. What do professional bodies currently do in respect of customers who need extra support? Questions on other market interventions
  16. Is there anything useful the government can learn from other examples of market intervention, including those led by industry?
  17. Are there other enforcement or regulatory agencies that you think should have a role in this area, and what are the advantages, disadvantages, benefits or risks of any of these organisations taking on a regulatory role?
  18. Do you know of examples of effective law, or enforcement, from other countries or jurisdictions? 
  19. What future changes do you consider will most impact the standards expected of the tax advice profession?
  20. What other examples are there of existing powers (HMRC or other government powers) that could be used to tackle poor tax adviser behaviour?
  21. What is your view of the effectiveness of HMRC’s current powers?
  22. What evidence do you have of problems clients have experienced due to lack of redress and what solutions would you propose?
  23. How could consumers be helped to make better choices?
  24. Are there any circumstances where a penalty should be levied on the adviser instead of, or in addition to, the client?
  25. What scope is there for the professional bodies to take on a greater regulatory role in a similar way to Anti-Money Laundering (AML) supervision? (where some professional bodies supervise their members and the professional body, in turn, is supervised by the Office for Professional body AML Supervision (or OPBAS) within the Financial Conduct Authority).
  26. What would the impacts be of introducing external regulation, particularly on clients and on those agents already meeting high standards?
  27. Are there any existing bodies that might be well-placed to act as regulator? What potential conflicts of interest could you see?
  28. The government is particularly interested in views on the following questions:
    1. the benefits of the options set out above
    2. whether there are sectors or types of tax advisers which would face particular challenges, and what those challenges would be
    3. views on the impacts of each option, for example, costs for customers, advisers or other costs and the impact on any particular groups effects on competition and the paid tax advice market. How any impacts could be mitigated behavioural effects and what might advisers or customers do in response?
    4. alternative options which meet the objectives outlined above.
  29. Can you suggest or support any other activities which should be considered?
  30. What market failures need to be addressed?
  31. What evidence is there that will enable understanding of customer and agent behaviour and likely responses to any intervention?

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