Raising standards in the tax market: next steps

HMRC have published ‘Raising standards in the tax advice market, Summary of responses and next steps’. 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.

HMRC raised their Call for Evidence on improving standards in the tax advice market back in March 2020. Certain tax agents mass-marketed tax avoidance schemes and by the time of the Disguised Remuneration Loan charge review it was revealed that some tax agents were not working to the standards required by HMRC.

As the Rt Hon Jesse Norman Financial Secretary to the Treasury notes:

“Many tax advisers are technically competent and adhere to high professional standards. However, responses from across the sector have confirmed that the market for tax advice is not working as well as it should be. Some advisers are incompetent and some actively bend or break the rules.”

The Call for Evidence set out the following outcomes that the government was seeking from any market intervention:

• Market transparency, so that taxpayers have the information they need to choose an adviser that meets their needs and are able to steer clear of unsuitable providers.
• That taxpayers who want to engage a tax adviser are able to access reliable advice from an appropriately competent professional who maintains high ethical standards.
• That market access is preserved so that taxpayers can continue to get reliable advice should they wish to.
• To enhance tax compliance.

HMRC intend to follow up its Call for Evidence with the following measures:

1. Raise awareness of the standard and review HMRC powers to enforce the standard. 

HMRC will:

• Take action to raise awareness of HMRC’s standards for agents with target audiences.
• Conduct and publish the results of an internal review of the powers currently available to HMRC that help enforce that Standard.

[Editorial note: HMRC’s Standard for agents is based directly upon the principles and standards in the Professional Conduct in Relation to Taxation, which are to be followed by all members of the professional tax and accountancy bodies.]

2. Consult on the requirement for professional indemnity insurance.

A new consultation will carefully consider:

• A definition of tax advice and the activities that should be in scope.
• Impacts and burdens on tax advisers, taxpayers and the market.
• Options for enforcement.
• The operability of the policy.

3. Work collaboratively with Professional Bodies.

4. Tackle high costs to consumers of claiming tax refunds.

• The government is also concerned about the cost to taxpayers of advisers who are claiming tax refunds on their behalf.

[Editorial note: this covers the high volume tax repayment agents who are in business to claim what should be basic employee tax deductions. There has also been a huge surge in websites which often brand themselves to look like HMRC and charge taxpayers to obtain refunds which could be simply claimed online via a taxpayer's account with HMRC.]

External link

Raising standards in the tax advice market Summary of responses and next steps