Improving standards in tax advice – latest developments
By Susan Cattell, Head of Tax Technical Policy
23 January 2023
Susan Cattell reports on the latest developments in the ongoing work to improve standards in the tax advice market, including the publication of HMRC’s updated standard for agents.
Improving standards in the tax advice market
The 2019 Independent Loan Charge Review recommended that the government should improve the market in tax advice and consider establishing “a more effective system of oversight, which may include formal regulation, for tax advisers”. In response the government has conducted several consultations, to which ICAS has responded:
- 2020 - Call for evidence: Raising standards in the tax advice market
- 2021 - Consultation: Raising standards in the tax advice market: professional indemnity insurance and defining tax advice
- 2022 - Consultation: Raising standards in tax advice, protecting customers claiming tax repayments
After the 2021 consultation, the government decided not to proceed with the proposal for mandatory professional indemnity insurance for tax advisers. A further consultation was expected in summer 2022 on regulation (including a definition of tax advice), but this has not yet materialised. However, a response to the 2022 consultation on repayment agents has now appeared – and HMRC has also updated its standard for agents.
Outcome of the consultation on repayment agents
The 2022 consultation put forward proposals aimed at protecting taxpayers claiming repayments by addressing problems identified with some repayment agents. The outcome of the consultation was published on 11 January 2023.
The main proposal set out in the consultation will be implemented; legislation will be introduced prohibiting the use of assignments of income tax repayments and new transparency requirements will also be included in HMRC’s standard for agents.
Other actions include:
- HMRC will explore introducing mandatory pre-contractual disclosure forms.
- Repayment agents will be required to register with HMRC, as part of wider work on enhancing the tax regulatory framework – further details of the registration requirement for repayment agents will be set out in early 2023.
- HMRC will undertake further work on ensuring that a taxpayer has consented to a claim made on their behalf. It will also review existing agent authorisation processes.
HMRC’s updated standard for agents
At the same time as the consultation outcome was issued, HMRC published its updated standard for agents and an updated policy for agents.
HMRC’s standard for agents
The standard for agents sets out the behaviour HMRC expects from tax agents and tax advisers, and gives an overview of the way HMRC will tackle the minority of agents who do not meet the standard. It was first published in 2016 and applies to all agents. The updated version now includes detailed transparency requirements (including a requirement to agree terms of engagement with a client in writing before starting to act) and has been brought into closer alignment with Professional Conduct in Relation to Taxation (PCRT).
HMRC’s policy for agents
HMRC’s intention in the updated version of its policy for agents is to be more open and transparent about how it works with agents. The policy includes details of how HMRC helps agents to help clients. It also sets out how HMRC will tackle the minority of agents who do not comply with the standard for agents. Action could include limiting an agent’s access to HMRC’s online services or blocking access altogether. Where an agent belongs to a professional body, HMRC also has the power to disclose misconduct to that body.
ICAS reaction
ICAS has welcomed both the announcement of the new measures to protect consumers who use tax repayment agents and the publication of the updated HMRC standard for agents. However, in the long term, we believe the only fully effective way to protect consumers (both those claiming repayments and those using tax agents for other reasons), is to introduce a requirement that anyone acting as a tax agent should be qualified and belong to one of the main professional bodies that subscribe to and enforce PCRT.
Let us know your views
We welcome Members’ input on consultations or other tax-related matters – email tax@icas.com to share your insights and feedback. ICAS responds to many tax calls for evidence and consultations, as well as producing tax policy papers and reports. We also regularly attend meetings with HMRC at which service levels, delays and other issues are discussed, and we raise problems being encountered by Members.