Professional relationships – regulation of the tax profession?
Charlotte Barbour outlines recommendations put forward by the ICAS Tax Board regarding professional relationships and asks if regulation of the tax profession may be ahead. This topic is also the subject of a call for evidence by HMRC on standards in the tax advice market.
What has ICAS recommended?
Relationships between taxpayer, agent and HMRC
HMRC and agents need a good working relationship to facilitate taxpayer compliance. Trust and respect between agents and HMRC staff are vital, as is respect for the different relationships between the three parties: taxpayer, agent and HMRC.
Relationships between the three parties may not always have cut and dried boundaries. Some taxpayers may feel comfortable dealing directly with HMRC and will never use an agent or will only use one occasionally to deal with particular transactions; others will want an agent to handle all their tax affairs and to deal with HMRC on their behalf. Agents who are being paid to act for taxpayers will have contractual terms in place, governing the relationship with their clients.
Tax agents also have a relationship with, and responsibilities to, HMRC. They should conduct themselves in a professional manner, but their duty of care is to their client, the taxpayer. HMRC needs to recognise this and understand that whilst agents support compliance, they do not have a contractual relationship with HMRC. For those agents who are members of professional bodies, certain standards of conduct are required; in relation to tax these standards are set out in Professional Conduct in Relation to Taxation (PCRT). HMRC had been undertaking some work with the professional bodies on an Agent Strategy; this project should be reinstated and developed.
Who can be a tax agent?
In the UK there is no restriction on the provision of tax services – anyone can offer them. Members of the main professional bodies must meet certain standards (including having adequate professional indemnity insurance and undertaking continuous professional development); if they fall short a client can complain to the relevant body and disciplinary action can be taken where appropriate. HMRC can also report members to their professional body but currently only makes limited use of this power.
Whilst unqualified agents should comply with HMRC’s ‘standard for agents’ this does not fully replicate professional body standards; HMRC should also enforce these more limited standards by imposing sanctions on those who fail to comply. In the worst cases HMRC should fully utilise its existing powers to exclude agents from access to HMRC systems.
It would be helpful to have a clear decision on whether some form of regulation of the tax profession is to be introduced or not; it is very difficult, if not impossible, to enforce standards when anyone is permitted to act as a tax agent. We recommend that the long term aim should be to require that all tax agents should be qualified and should belong to one of the main professional bodies. There should be a transitional period, perhaps involving some form of affiliated status, to allow existing agents to adapt to the change.
ICAS is collating and preparing a response to the HMRC Call for Evidence on standards in the tax market.
The benefits of our recommendations
We hope that the recommendations above will be taken into consideration; the benefits of adopting our recommendations would include:
- Developing better working relationships between HMRC and agents to improve compliance
- Ensuring adherence to professional standards by all agents and reducing the risk of taxpayers appointing a poor agent
- Improving trust in HMRC and in tax agents, which supports voluntary compliance
Join the debate
The recommendations in the ICAS Future of Tax paper were agreed by the ICAS Tax Board in 2020 and inform the work of ICAS Tax. They will be reflected upon and revised to reflect economic, social and political developments.
There are also opportunities to join ICAS tax committees to discuss these recommendations and many other tax policy and practical matters – email firstname.lastname@example.org to find out more about being a committee member.