HMRC's new consultation on raising standards in the tax advice market and strengthening the regulatory framework, focuses on automating tax registration for agents. It also outlines proposals for strengthening the regulations, its administration and enforcement. The new rules will affect 85,000 tax advice firms.
Along with the broader proposals on raising standards, the government wants to prevent 'incompetent and unscrupulous tax advisors' from registering and acting as agents. This consultation is considering ways to improve how tax practitioners register with HMRC. It intends to mandate registration for all tax practitioners who wish to interact with HMRC.
HMRC aims to automate and streamline the existing registration routes for tax practitioners.
- At the point of registration, HMRC would check that the tax practitioner complies with the requirements to register for Anti-Money Laundering (AML) supervision and is up to date with their tax affairs.
- HMRC would then periodically reconfirm ongoing compliance with these requirements.
- This would ensure that registered tax practitioners continue to meet basic standards while interacting with HMRC on behalf of a client.
- HMRC warn that simple registration with them may give the impression of official approval and further oversight was needed.
There is concern that anyone can provide tax advice and services to clients and can do so with limited or no oversight if they are not members of a professional body. According to the government, this means activities causing problems in the market can go unnoticed. Where substandard or unscrupulous activity is identified, there are variations in and limits to, the action taken against tax practitioners and consequently, they may continue to operate in the market.
The document examines new regulatory bodies, strengthening rules and monitoring and improved enforcement.
This consultation seeks views on:
- Potential approaches to raising standards.
- Whether the government should pursue introducing a requirement for paid tax practitioners to be a members of a recognised professional body that supervises their professional standards.
- How professional bodies and the government can work together to raise the standards of tax practitioners.
- Which groups of tax practitioners should be in scope or excluded from the proposed option?
- The first step of mandating registration with HMRC for tax practitioners who wish to interact with HMRC on behalf of their clients and the requirements that HMRC should establish to enable registration.
As a result, the consultation sets out the three possible approaches:
Potential approaches to strengthening the regulatory framework
| Approach | Model |
|---|---|
| 1. Mandatory professional body membership | With professional bodies monitoring and enforcing standards of their members and raising those standards where necessary. Tax practitioners would be required to hold membership of a recognised professional body to provide paid-for tax advice and services. |
| 2. Joint HMRC-industry enforcement (a ‘hybrid model’) | HMRC and industry would monitor and raise standards of the market. Unaffiliated tax practitioners would have to be supervised by HMRC and professional body members would be subject to the supervisory requirements of their professional body. |
| 3. Regulation by a government body | The government body would set, monitor, enforce and raise standards in the market. A new independent regulator or an existing regulator with an expanded remit would supervise tax practitioners. |
The government considers that mandatory registration with HMRC and mandatory professional body membership of tax practitioners could support its objectives.
In meeting the objectives of raised standards in the tax advice market, new rules should achieve:
- Improved quality of service to clients and therefore tax compliance, from higher quality tax advice and tax services.
- More taxpayers access quality tax advice and services that enable them to pay the right amount of tax at the right time and access appropriate tax reliefs.
- Reducing the tax gap and improving HMRC efficiency by reducing work needed to correct errors.
- A greater trust in the tax advice market.
Consultation chapters
- Chapter 2: sets out the ongoing work to tackle issues in the market and references previous consultations.
- Chapter 3: sets out the problems within the tax advice market and the government’s intention to strengthen the regulatory framework.
- Chapter 4: describes our objectives and the components of good regulation.
- Chapter 5: sets out the intention to introduce an enabling step to strengthen the controls on access to HMRC’s agent services and introduce mandatory registration to interact with HMRC.
- Chapter 6: outlines how the strengthened framework should meet the objectives set out in Chapter 4 and the three approaches to strengthening the regulatory framework.
- Chapter 7: explores mandatory membership of a recognised professional body as an approach to raising standards.
- Chapter 8: discusses to whom regulation should apply.
- Chapter 9: covers the implementation and next steps.
Responses to this consultation and enquiries can be emailed to
J. De Brito
'Raising standards in the tax advice market' consultation
Agent Policy Team
HMRC
14 Westfield Avenue
Stratford
London
E20 1HZ
Telephone enquiries 03000 585115 (from a text phone prefix this number with 18001)
This follows the earlier consultation Call for evidence on raising standards in the tax advice market (2020).
Useful guides on this topic
AML: Anti-Money Laundering Zone
Anti-Money Laundering (AML) Zone takes you to our supporting AML guides, checklists and articles.
Named tax avoidance schemes, promoters, enablers
HMRC publishes a list of Named tax avoidance schemes, promoters, enablers and suppliers. It is not recommended that taxpayers use any of these schemes, as HMRC does not consider that they work and you may end up with a significant tax liability if you engage with the scheme suppliers.
Consultation: Raising standards in the tax advice market
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. The consultation will close on 15 June 2021.
Tax Agents: Raising standards in the tax market
HMRC's Summary of responses, ‘Raising standards in the tax market: professional indemnity insurance and defining tax advice’ reveals no plans to introduce compulsory Professional Indemnity Insurance (PII) and a desire to create a legislative definition of 'tax advice'.
External links
HRMC Open consultation 'Raising standards in the tax advice market – strengthening the regulatory framework and improving registration'
