Consultation on tackling tax advisers facilitating non-compliance

Responses to a previous consultation, 'Strenghtening the regulatory framework of the tax advice market and improving tax adviser registration' highlighted the need for quicker and tougher action against advisers who have facilitated a client's non-compliance. 

HMRC have some powers to take action against promoters and dishonest tax advisers but there are still some advisers who are causing harm to the tax market. This consultation is aimed at discussing options for imposing tougher sanctions on these advisers.   

The consultation aims to explore: 

• Proposals making it easier for HMRC to gather information from tax advisers where HMRC believe their actions have led to non-compliant behaviour.  
• Disclosing concerns to professional bodies. 
• Setting appropriate deterrents. 
• Broadening the scope of publishing details of tax advisers who are the subject of HMRC sanctions. 

The Government plans to review and enhance the current framework for advisers facilitating non-compliant behaviour by: 

• Broadening the scope of disclosing misconduct of tax advisers. 
• Reforming existing information powers. 
• Enhancement of the current penalty regime. 

The main areas of change proposed in the consultation are: 

What are enhanced powers intended to tackle

• The consultation seeks overall opinions on what actions taken by advisers should be within the scope of the new proposals. See: Questions 1-4 on the Questions tab. 

Intended scope of the proposals

• Tax advisers who interact directly with HMRC are expected to be within the scope of the new proposals. 
• Tax advisers who do not interact directly with HMRC but still provide advice services are also expected to be within the scope of the new proposals; this includes specialists and bookkeepers. 
• The consultation seeks opinions on who should and should not be within the scope.  See: Questions 5-6 on the Questions tab. 

Enhancing powers to enable HMRC to investigate and request information from tax advisers

The new proposals are: 

• Combining the issue of an information notice and a conduct notice.
• Where HMRC reasonably suspect a tax adviser is facilitating non-compliance, new powers will be given to assist HMRC in acquiring information from the adviser. 
• Expanding the activity where information is allowed to be requested by HMRC to include the facilitation of inaccurate returns or documents. 
• Removing the need for Tribunal approval before issuing file access notices. 
• Reforming the amount of financial penalty for failing to comply with a file access notice. See: Questions 7-13 on Questions tab

Enhancing financial penalties for tax advisers who cause harm to the tax system

• Current rules allow for HMRC to issue a penalty when a tax adviser has been dishonest in bringing a loss of tax while assisting clients. 
• Penalties range from £5,000 to £50,000. 
• New proposals suggest a tax loss geared penalty or a penalty tied to the fees the tax advisers have charged. 
• New proposals will see the company or firm responsible for the tax loss. See: Questions 14-23 on the Questions tab

Broadening disclosure of HMRC's concerns about tax advisers to professional bodies

• Two-thirds of advisors are affiliated with a professional body. Where misconduct is suspected, the professional body can investigate. 
• Potential breaches are not always picked up by professional bodies. 
• Provisions could be introduced that allow HMRC to disclose more information, in a simpler manner, to professional bodies than currently allowed. See: Questions 24-25 on Questions tab. 

Broadening the scope of publication of tax adviser details when they are the subject of an HMRC sanction

Currently, taxpayers are only named in a small number of contexts and HMRC's work on tackling tax avoidance is not visible in one place. 

• The Government believes taxpayers should be better informed about any sanctions imposed on tax advisers. 
• It is proposed that the following sanctions may be introduced: 
  • For failing to meet professional standards which could be published. 
  • For failing to meet tax obligations which could be published. 
• The Government believes HMRC should have the power to publish details of significant breaches. 
• Safeguarding will be put in place to avoid abuse of any publishing power. See: Questions 26- 33 on the Questions tab. 

Responses should be sent by 7 May 2025, via email or post. 

Useful guides on this topic

Setting up as a tax agent
What do you need to consider when setting up as a tax agent? What are the steps? How do you register with HMRC?

Topical tips: Avoiding negligence claims
An accusation of negligence can be extremely stressful for a firm and its advisers. The best strategy is to manage risks in this area, but in order to manage risks, you need to identify them.

Tax agents: HMRC standards for agents
Our guide to HMRC's 'Standard for agents', HMRC's approach to tackling bad agent behaviour, and providing a definition of a tax adviser.

 External link

Consultation: Enhancing HMRC's ability to tackle tax advisers facilitating non-compliance

Question 1: Do you agree that HMRCs powers to tackle tax advisors who harm the tax system could be more effective?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 2: Do you agree with the government’s aim that any enhanced powers should allow for swift, effective, and proportionate action in cases of tax adviser activities that result in harm to the tax system and facilitates non-compliance?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 3: What actions that lead to harm being done to the tax system should be within the scope of the proposals outlined within this consultation? Please give reasons for your answer.

Question 4: Do you have any other suggestions for how HMRC might enhance its powers to tackle non-compliance facilitated by tax advisers? Please give reasons for your answer.

Question 5: Do you have any comments on the proposed scope?

Question 6: Are there any other groups HMRC should consider?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 7: Do you agree that it should be easier for HMRC to obtain information from tax advisers where HMRC reasonably suspects the tax adviser’s activity has facilitated an inaccuracy in a taxpayer’s document or return.

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 8: Do you believe that ‘reasonable suspicion’ is the right threshold to issue a conduct and information notice? Are there any alternatives HMRC should consider?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 9: Do you agree with the proposed changes to the powers to gather information from tax advisers?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 10: Do you have any comments about the proposal to remove the safeguard requiring tribunal approval for a file access notice?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 11: Are any other changes to safeguards needed to ensure Schedule 38 can be used more swiftly and effectively?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 12: Are there any unintended consequences of the proposed changes?

• Yes.
• No.
• Maybe.
• Don’t know.|

Please give reasons for your answer.

Question 13: Are there additional/alternative ways HMRC should gather information related to tax advisers who cause harm to the tax system?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 14: Do you believe that the current penalties under Schedule 38 Finance Act 2012, Tax Agents: Dishonest Conduct provide an adequate deterrent against non-compliance that causes harm to the tax system?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 15: Do you believe that penalties should be introduced for tax advisers who have facilitated non-compliance that causes harm to the tax system?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 16: Should the government reassess how penalties for tax advisers are determined to enhance deterrence against non-compliance?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 17: Which approach do you think will be most effective in reducing tax advisers facilitating non-compliance in their client’s returns?

A. a penalty based on the potential revenue lost

B. a penalty based on the tax adviser’s fees

C. a penalty based on a business’s global turnover
D. other (please specify)

Please give reasons for your answer.

Question 18: Do you believe there should be a maximum penalty amount?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 19: If you believe a maximum penalty should be in place, how do you feel it should be calculated? Please give reasons for your answer.

Question 20: Do you agree the penalty should escalate in stages, based on additional instances of facilitation of non-compliance?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 21: What other changes to the maximum and minimum financial penalty thresholds would be needed to ensure that a penalty charged in a case is more proportionate to the tax loss poor tax advice has caused?

Question 22: Do you agree with the government’s proposal to introduce an option to charge penalties on tax adviser business entities rather than individuals, except where it can be evidenced that the wider business was not aware of the individual tax adviser’s actions?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 23: What else should be considered when looking at penalties charged on tax advisers?

Question 24: Are there any reasons why HMRC should not make further non-PID disclosures to professional bodies, as well as continuing with PIDs (where appropriate)?

Question 25: What types of behaviours or activities do you consider it appropriate for HMRC to make further disclosures about?

Question 26: Do you believe that it is in the public interest for HMRC to publish more information about its activity, such as the details of tax advisers subject to a formal sanction by, or a restriction on their dealings with, HMRC?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 27: When considering where to set the threshold of proportionality for publication, which types of sanctions do you believe should be included, and which should be left out?

Question 28: Is the short-form and long-form approach to publication sufficiently flexible to allow HMRC to take a proportionate response to different degrees of poor tax adviser behaviour?

• Yes.
• No.
• Maybe.
• Don’t know.

Please give reasons for your answer.

Question 29: What information about each tax adviser should be published, and is there anything that should not?

Question 30: For how long should details remain published and in the public domain for short-form publication, and long-form publication?

Question 31: Which criteria for publication would set a fair and proportionate threshold for using publication?

Question 32: Do the proposed safeguards provide for a fair, proportionate, and workable publication framework?

Question 33: Are there any other safeguards which you think the government should consider for this publication power?