What next for HMRC’s powers to tackle tax advisers facilitating non-compliance?

Susan Cattell reviews the outcome of the consultation on giving HMRC more powers to deal with tax advisers facilitating non-compliance.

In May 2025, we responded to a significant consultation for all tax advisers which asked for views on:

1. Enhancing HMRC’s powers to investigate tax advisers where HMRC suspects their actions have led to an inaccuracy in a taxpayer’s document.
2. Enabling HMRC to request information from tax advisers where HMRC suspects misconduct (file access notices).
3. Introducing stronger penalties against tax advisers who contribute to the tax gap.
4. Publishing details of HMRC sanctions on tax advisers.
5. Disclosures to professional bodies regarding concerns about their members’ activities that falls below the normal disciplinary investigation thresholds of professional bodies.

We commented that the details of proposals a), b) and c) above, needed significant amendment. As they stood, they weren’t properly targeted on the minority of problem agents and could adversely affect a generally competent adviser who adheres to professional standards but inadvertently makes a mistake. They could also have deterred good advisers from working with difficult clients.

We were generally supportive of the proposals for broadening disclosure of HMRC’s concerns about tax advisers to professional bodies, subject to agreement of appropriate thresholds for reporting.

Government response to the consultation

On L-Day the government published the outcome of the consultation and draft legislation.

The government acknowledges respondents’ desire for HMRC to ensure any changes made to current powers and sanctions are proportionate and target the right tax advisers. In a positive development it states that the intention of the draft legislation is only to bring within scope agents who deliberately facilitate non-compliance, not tax advisers ‘who make genuine one-off accidental errors or differences of legal interpretation’. However, the targeting and safeguards may still require improvement to ensure this intention is achieved in practice.

It appears that filing one incorrect return might still be sufficient for HMRC to be able to form a ‘reasonable suspicion’ that the agent is doing or has done something deliberate with a view to bringing about a loss of tax revenue, permitting it to issue a file access notice, without any independent scrutiny (tribunal approval won’t be required). This might be appropriate in some cases but leaves open the possibility that agents who aren’t the stated targets of the legislation could receive file access notices which wouldn’t have been issued if the safeguard existed - and may not be justified.

‘Reasonable suspicion’ is very subjective. The government response noted that it would ‘work to ensure the term ‘reasonably suspect’ is defined to prevent any ambiguity or confusion amongst taxpayers, tax advisers, and HMRC itself’. It’s unclear how this will be achieved: Any lack of clarity points to a need for independent scrutiny by the tribunal before file access notices are issued.

Consultation period on the draft legislation

There is a consultation on the draft legislation which closes on 15 September. Let us know if you have any views, in particular on whether the legislation will genuinely only affect agents deliberately facilitating non-compliance or could leave others within scope.

Tax regulatory framework

One thing missing on L-Day was any announcement about a possible tax regulatory framework (following the 2024 consultation ‘Raising Standards in the tax advice market – strengthening the regulatory framework and improving registration’).

We support action against incompetent, unprofessional, and unscrupulous tax advisers whose activities harm clients, reduce public revenue, and undermine the tax advice market. For some time, we have been calling for the introduction of a requirement for all tax advisers to be qualified and to be a member of one of the main professional bodies - we supported this option in our response to the 2024 consultation. 

It's disappointing that despite majority support for this option in responses to that consultation, there is no indication that it’ll be taken forward. We believe this would address many of the identified problems in the tax advice market.

However, proposals requiring all tax advisers to register with HMRC are going ahead, with details and draft legislation also being published on L-Day

Sharing more information with professional bodies

There will inevitably be instances of poor conduct by a minority of members within professional bodies. The proposals in the original consultation for HMRC to share more information about poor or inappropriate behaviour with those bodies represented a constructive approach. Access to such information would support helpful, timely and effective interventions by professional bodies.

The government response to the consultation included a statement of intent to work with professional bodies to help them address poor conduct from their members. This is a positive step — as is the commitment to broaden the disclosure of HMRC’s concerns them. We look forward to further discussions with HMRC about this.

Let us know what you think

We respond to tax consultations and calls for evidence and attend meetings with HMRC at which service levels, delays and other issues you raise with us are discussed. We welcome input from members to inform our work; email us to share your insights and feedback.

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