New powers for HMRC against tax advisers who facilitate non-compliance

Details of significant changes due to come into effect from 1 April 2026 have been set out in draft legislation published as part of L-day. The changes, when introduced as part of the Finance Bill 2025-26, will reshape how HMRC can investigate and penalise tax advisers who facilitate non-compliance.

The reforms follow a consultation carried out earlier in 2025, which built on previous reviews including the 2019 Independent Loan Charge Review and HMRC’s 2022 review of its powers to uphold the Standard for Agents. The updated policy aims to: 

• Deter harmful adviser behaviour. 
• Protect compliant taxpayers. 
• Reduce the tax gap. 
• Improve public trust in the tax system  

From “dishonest” to “deliberate” conduct 

The proposed legislation, which will amend schedule 38 of the Finance Act 2012 (the schedule), will replace the term “dishonest conduct” with “deliberate conduct”, broadening the scope of HMRC’s enforcement. Under the new definition, a tax agent (the term used in legislation) is considered to have engaged in deliberate conduct if they intentionally act—or fail to act— with a view to bring about a loss of tax revenue. This applies even if no actual loss occurs or the adviser is acting on client instructions. 

A loss of tax revenue would include not only accounting for less tax than they would be due but would also include claiming for more relief than entitled to, accounting for tax later than they should, or obtain. 

Who Is a “Tax Agent”? 

The definition of a tax agent will be expanded from “individual” to “person”, meaning it’ll include firms, partnerships, and corporate entities. This ensures that all types of advisers can be held to the same standards. 

What powers will HMRC have? 

HMRC will be able to issue conduct notices to advisers suspected of deliberate conduct. These notices must outline the grounds for the determination and may lead to further compliance action. 

The reforms will also remove the requirement for tribunal approval before issuing a file access notice. Instead, approval from a senior HMRC officer will suffice. This change is designed to speed up investigations while maintaining internal oversight. The approval of a tribunal will still be required where a file access notice is to be issued against a person who isn’t a tax agent. 

Penalties and sanctions for failing to comply with a file access notice will also be made tougher. 

The new penalty framework includes: 

• Deliberate conduct penalties: 

• • 70% of potential lost revenue, or £7,500 where no revenue is lost. 
  • Penalties may be reduced from 70% based on the quality of disclosure (e.g. timing, nature, extent). The minimum penalty thresholds below which the penalty cannot be reduced will be 35% for prompted disclosures and 20% for unprompted disclosures. 
  • The deminimus level of a penalty will be £7,500 and where a penalty of more than £1 million would have been payable then that higher amount will be applied as the penalty. 
• Increased penalties for repeat offenders (those receiving more than 2 notice of assessment to penalty with a 20 year period): 
• • Up to 100% of lost revenue. 
  • Maximum fines of £5 million. 
• Daily penalties of up to £1,000 for prolonged non-compliance with file access notices (more than 30 days after a file access daily penalty notice has already been issued). 
• Inaccuracy penalties of up to £3,000 per document for knowingly submitting incorrect information. 

HMRC will also publish the names of advisers who incur penalties exceeding £7,500, increasing reputational risk. 

Expanded tax scope 

The definition of “tax” will be expanded to include, amongst others: 

• Digital services tax 
• Plastic packaging tax 
• Economic crime levy 
• Multinational and domestic top-up taxes 
• Insurance premium tax 
• Soft drinks industry levy 
• And other newer levies 

Final thoughts 

These changes will mark a significant evolution in how HMRC approaches tax agent conduct. For most tax advisers, who act appropriately and follow the ethical principles required as set out in the Professional Conduct in Relation to Tax For advisers, the new proposals will have no impact.  

However, for those tax advisers who engage in conduct which is unacceptable the new measures may act as a deterrent or trigger to mend their ways. Alternatively, the price to pay will be high. Taken together with other measures being brought in such as the proposed tax agent registration framework, the number of unscrupulous tax advisers should be substantively reduced, levelling the playing field for those that do operate and behave appropriately.