Consultation outcome

Raising standards in the tax advice market: strengthening the regulatory framework and improving registration - summary of responses

Updated 30 October 2024

1. Foreword

As Exchequer Secretary to the Treasury, I have 3 strategic priorities for HMRC: to close the tax gap; to modernise and reform the tax system; and to improve customer service.

This government is taking swift action to deliver on these priorities, including by recruiting new staff to HMRC and bearing down on tax non-compliance.

We also want to make it easier for all taxpayers to get their taxes right. Many taxpayers rely on competent tax practitioners, such as accountants and bookkeepers, to help them with this. Good practitioners are invaluable to the tax system. They provide sound advice and help their clients to navigate complexity. This, in turn, enables clients to spend more time focusing on the other things which matter, such as running and growing a business.

But there is a minority of practitioners who cause harm, to their clients and to the wider tax system. This might be the result of a lack of competence or due care, or in some cases active malicious intent.

This government is committed to addressing these issues by tackling harmful actors and raising standards in the tax advice market. We have therefore decided to take a series of steps in response to the consultation on raising standards in the tax advice market. I am grateful to all those who shared their views and ideas. We received 426 written responses, and many others also engaged through a series of roundtables and webinars.

I am pleased to announce that in response to this consultation the government will, as a first step, require tax practitioners wishing to interact with HMRC on behalf of clients to register with HMRC from April 2026. This will give HMRC better scrutiny of tax practitioners operating on clients’ behalf and will give greater confidence to taxpayers who use these practitioners. It is a substantive first step towards raising standards in the tax advice market and it will be accompanied by the necessary investment to ensure HMRC’s registration services for practitioners are easy to use.

To tackle those with malicious intent, I am also announcing that:

• tax practitioners wishing to submit an income tax repayment claim on behalf of a client will be required to obtain an Advanced Electronic Signature from their client to prove they have been authorised to make the claim
• HMRC will shortly consult on options for stronger sanctions against practitioners who behave in ways which enable their clients to pay the wrong amount of tax

All the action we take should be proportionate and well-targeted. That is why I also want to continue to work closely with the sector to consider how best to take forward what we learned from the consultation. I know how important it is that we get any regulatory intervention right. We will continue to consider the case for intervention and look forward to further discussion.

James Murray MP
Exchequer Secretary to the Treasury

2. Background

Most tax practitioners are competent, adhere to professional standards and deliver real value by providing advice and services to business and individual taxpayers. There are approximately 85,000 tax practitioner firms assisting 12 million taxpayers to get their tax right, thereby helping to reduce the tax gap.

Some tax practitioners, however, do not meet professional standards and provide substandard or unscrupulous tax advice and services. This harms clients; it undermines confidence in high quality tax practitioners and in the tax system; it takes up HM Revenue and Customs’ (HMRC) resources; and it widens the tax gap.

While HMRC continues to tackle issues with unscrupulous or substandard practitioners as they arise, the government has also sought to understand whether more could be done to prevent issues arising in the first place by strengthening the current partial regulatory framework for tax practitioners. As it stands, almost anyone can provide tax advice and services to clients and can do so with limited or no oversight if they are not a member of a professional body (it is estimated that roughly one third of tax practitioners in the UK are unaffiliated to a professional body).

HMRC issued a public consultation in March 2024 seeking views on a range of options to strengthen regulation of the tax advice market. The consultation document set out the proposed objectives of any regulatory intervention – it should:

• be proportionate to the harms observed and the benefits expected to minimise extra costs and burdens for the taxpayer, tax practitioners and their clients, and professional bodies
• provide additional ways to monitor and enforce minimum standards of tax practitioners accessing HMRC systems and services
• remove substandard and unscrupulous tax practitioners from the market by either improving their capability or ensuring they exit the market. It should do this by providing clarity on the standards required, support to meet those standards, and increasing the likelihood that error and misconduct are identified and dealt with appropriately
• provide confidence in the quality of tax advice and services that clients receive from tax practitioners and ensure that support is available to clients when they want to resolve issues that arise due to actions taken by their tax practitioner

A regulatory intervention which delivers on these objectives would increase trust in tax practitioners, provide greater protection for consumers of tax advice and services, and enable more taxpayers to pay the right amount of tax at the right time, thereby reducing the tax gap.

As a first step towards this, the consultation asked for views on mandating registration with HMRC for all tax practitioners wishing to interact with HMRC on behalf of their clients. The consultation went on to set out 3 possible approaches to strengthening the broader regulatory framework for tax practitioners:

Approach	Model
1. Mandatory membership of a recognised professional body	Tax practitioners would be required to hold membership of a recognised professional body to provide paid-for tax advice and services. Professional bodies would monitor and enforce standards of their members.
2. Joint HMRC-industry enforcement (the ‘hybrid’ model)	Unaffiliated practitioners would be supervised by HMRC, and professional body members would remain subject to their body’s supervisory requirements.
3. Regulation by a government body	A new independent regulator (or an existing regulator with an expanded remit) would supervise all practitioners. The regulator would set and enforce minimum standards, monitor compliance in the market and provide support and redress for customers.

The consultation sought respondents’ views on the merits and drawbacks of these 3 approaches. It also asked for views on the potential scope of any regulatory intervention, including whether it should apply to all tax practitioners or just to those who interact with HMRC, whether it should apply at the firm level or to each practitioner individually, and whether and how to define a tax practitioner in law.

In summary, the consultation asked questions about:

• problems related to the partial regulatory framework
• mandating registration to access HMRC’s systems
• approaches to strengthening the regulatory framework
• how mandatory membership of a recognised professional body could raise standards
• who should be regulated
• implementation and next steps

This document sets out a high-level summary of respondents’ answers to those questions. It should be read in conjunction with the consultation document itself.

3. Summary of responses and next steps

The government is grateful for the detailed consideration and comments provided in response to the consultation

The consultation ran from 26 March to 29 May 2024. It received 426 written responses (respondents are listed in the Annex). HMRC also:

• held 16 dedicated external roundtables with a range of stakeholders
• presented at six external forums, including HMRC’s Representative Body Steering Group, Larger Professional Service Firms and the Administrative Burdens Advisory Board
• hosted a public webinar with over 600 attendees

Responses were received from businesses (large and small), professional body members, professional bodies, tax practitioners (affiliated and unaffiliated), charities and more. A wide variety of professions responded including accountants, repayment agents, research and development advisers, bookkeepers, financial advisers, payroll professionals and legal professionals.

Themes

Strengthening the regulatory framework

Most respondents supported government intervention to raise standards in the tax advice market.

Many responses highlighted the current lack of requirements to enter the tax advice market, suggesting there were insufficient deterrents to prevent substandard and unscrupulous actors from working in the industry. A lack of ongoing supervision for tax practitioners who are not members of a professional body (unaffiliated practitioners) was a common concern among the professional bodies and their members. Along with this, respondents suggested that there was a perceived lack of consistent consequences for engaging in unethical practices and proposed that a minimum level of qualification or experience should be introduced. A few respondents also recommended providing statutory protection of titles such as ‘accountant’ and ‘tax practitioner’.

However, respondents also raised concerns about the burdens associated with increased regulation and the potential for those burdens to be disproportionate to the harms observed in the market if action was not specifically targeted towards problem areas. Many respondents noted that increased regulation could be expensive to businesses and costs might be passed on to clients.

Strengthening the controls on access to HMRC’s agent services

Consultation respondents were largely supportive of the proposal to mandate the registration of tax practitioners who wish to interact with HMRC. It was suggested that mandatory registration could enhance the security of services for tax practitioners, deter unscrupulous actors, and reassure clients about the reliability of their tax practitioners and their interactions with HMRC.

Many respondents also agreed with the proposal to improve HMRC’s registration process for access to practitioner systems and services alongside the introduction of additional registration criteria or checks, but there were mixed views on which checks to apply.

Approaches to strengthening the regulatory framework

Approach 1 – mandatory membership of a recognised professional body – was considered by the greatest number of respondents to be the approach most likely to fulfil the objectives set out in the consultation. Most of those who supported this approach cited the pre-existing regulatory frameworks of the professional bodies as the chief reason. The professional bodies’ entry requirements and compulsory continuing professional development were seen as conducive to ensuring the sufficient knowledge of professionals working within the industry. Monitoring, investigations, and sanctions carried out by the professional bodies were also mentioned as effective tools for compliance.

The responses from those not currently affiliated to a professional body tended to favour approach 3 – regulation by a government body. Many respondents, including some of those affiliated to a professional body, did not think that professional body membership guaranteed high standards or ethical practices. Respondents also noted the differing standards and methods of supervision used by the professional bodies. Some professional body members raised concerns about the perceived small number of inspections made by their bodies, arguing that the checks carried out by their bodies were too ‘light touch’ to expose most problems.

Many respondents raised concerns about any approach which would involve HMRC taking on a regulatory role (for example, approach 2 – joint HMRC-industry enforcement). Respondents noted that there could be a perceived conflict of interest, with a potential for HMRC to misuse, or to be seen to be misusing, its regulatory role for its own ends, for example by seeking to force its own interpretation of tax law on practitioners.

Who should be regulated

The majority of those who responded to the question of who should be regulated thought that the scope of any regulatory intervention should encompass the whole of the tax advice market. A smaller number felt it should be limited only to those practitioners who interact with HMRC. Respondents who supported a whole-market scope argued that it would ensure consistency, create a level playing field and minimise any potential gaps in regulation.

Next steps

Responses to the consultation were generally supportive of government intervention in the tax advice market in order to raise standards. The government agrees that more can and should be done to raise standards among tax practitioners. It wants to ensure that taxpayers can confidently choose a tax practitioner who will help them meet their tax obligations, and it wants to stop those in the market who give bad advice by ensuring there are consequences when they do so.

Strengthening the controls on access to HMRC’s agent services

The government will invest in improvements to HMRC’s tax practitioner registration services and will mandate registration of tax practitioners who interact with HMRC. Consultation respondents were strongly in favour of taking this step. It is the government’s intention that, from April 2026 onwards, all practitioners who interact with HMRC on behalf of a client will have to register with HMRC before doing so. HMRC will apply checks to all tax practitioners who register. HMRC will publish a technical consultation on the legislation ahead of Budget 2025 and will communicate further detail to relevant stakeholders in due course.

Approaches to strengthening the regulatory framework

Responses varied when it came to the exact action which should be taken to strengthen the broader regulatory framework, and many respondents raised concerns about the costs and burdens associated with any regulatory intervention. The government agrees that any intervention in the market should be proportionate and well-designed to address the problems observed. The government will therefore take on board the opinions shared in this consultation and will continue to work closely with the sector to consider options to strengthen the regulatory framework of the tax advice market.

Targeted reforms

Tax practitioners wishing to submit an income tax repayment claim on behalf of a client will be required to obtain an Advanced Electronic Signature from their client to prove they have been authorised to make the claim.

The government will also consult on measures to enhance HMRC’s ability to act against a tax practitioner where the practitioner facilitates a taxpayer’s non-compliance. As highlighted by some consultation respondents, the government is of the view that HMRC could do more to take swift and robust action against tax practitioners who can be shown to have facilitated their clients’ tax non-compliance. A consultation on specific proposals to enhance HMRC’s powers in this regard will be published shortly, with a provisional intention to implement any changes from 2026 onwards.

4. Further detail

Views on chapters 3 and 4: ‘Exploring the problem’ and ‘Objectives of a strengthened regulatory framework’

The consultation set out the limitations of the current partial regulatory framework for tax practitioners. Question 1 asked respondents whether they agreed that each of these limitations contributed to the issues observed in the market:

• no requirements of technical competence to practice
• no general deterrents for dishonest practitioners operating in the market
• disjointed monitoring of tax practitioners
• variations in the action taken against substandard and unscrupulous tax practitioners
• clients being unable to easily assess the competence of a tax practitioner

Around half of all respondents provided a response to this question. Figure 1 shows the frequency with which respondents agreed that each of the listed limitations of the partial regulatory framework contributed to the issues observed (respondents could select all that they felt applied). Common themes discussed by respondents who gave reasons for their answers are covered below.

Figure 1: The frequency with which respondents agreed that each of the limitations in the partial framework contributed to the issues observed (respondents could select all that applied) (Question 1). (n239)

Issues observed	Frequency
No requirements of technical competence to practice	178
No general deterrents for dishonest practitioners operating in the market	185
Disjointed monitoring of tax practitioners	141
Variations in the action taken against substandard and unscrupulous tax practitioners	153
Clients being unable to easily assess the competence of a tax practitioner	143
Other	22

There was agreement that the lack of a comprehensive regulatory framework undermined trust in the tax advice market, harmed clients and had contributed to the problems in the market.

Nearly three quarters of those who responded to this question thought the lack of a required level of technical competence to practise was a particular problem. Many suggested that practitioners should have to demonstrate relevant training to provide tax advice and services, for example via professional qualifications, technical work experience and/or continuing professional development. The complexity and constant development of the tax legislative framework was highlighted as a reason for the suggested requirements.

Over three quarters of respondents to Question 1 thought a lack of general deterrents for dishonest practitioners operating in the market contributed to the problems observed, with some raising concerns that, without deterrents, dishonest practitioners would feel encouraged to engage in unethical or fraudulent practices. A few respondents said that many of HMRC’s sanctions deal with specific wrongdoings but do not operate as a deterrent to prevent general bad practice. Some concerns were raised regarding the perceived lack of penalties specifically relating to practitioners operating dishonestly in the market (with the exception of action to tackle promoters of tax avoidance schemes). It was noted by a few respondents that even where qualified members of professional bodies were removed from their professional body for failing to meet certain standards, they were still able to practise as an unaffiliated practitioner.

Many respondents felt the level of monitoring across the tax advice market was disjointed and inconsistent and that this contributed to problems observed:

• anti-money laundering supervision of unaffiliated practitioners was seen as insufficient by over a quarter of professional bodies responding to this question
• members of professional bodies tended to argue that there was little systematic monitoring or enforcement action taken against unaffiliated tax practitioners
• a few professional bodies and their members noted that standards varied greatly across the different bodies, and felt that some practitioners would be more likely to act dishonestly where the monitoring carried out by their professional body was weak

Similarly, perceived inconsistency in the action taken against substandard and unscrupulous tax practitioners was seen by nearly two-thirds of respondents to Question 1 to contribute to the issues observed in the market:

• a few respondents believed that HMRC’s power to remove or suspend practitioners’ access to HMRC services was crucial for enforcing compliance but was not used enough
• members of professional bodies highlighted that they were subject to disciplinary processes and procedures and argued that an equivalent did not exist for unaffiliated practitioners

Most respondents to Question 1 agreed that clients were unable to assess the competence of a tax practitioner easily. It was felt that this was a particular limitation of the regulatory framework, given taxpayers seemed largely unaware that the tax advice market is not already regulated. Further perceived issues included clients’ inability to make informed choices owing to an absence of clear guidance and standardised criteria for choosing a practitioner.

Questions 2 and 3 asked respondents whether there were other components of a regulatory framework which would support the delivery of the government’s objectives and whether there was anything else the government should consider.

Some respondents said HMRC needed to detect unscrupulous activity more effectively and apply its powers more robustly to provide stronger deterrents against unethical practices. Others argued that whatever steps the government might take, including those approaches set out in the consultation, unscrupulous practitioners would continue to seek out gaps in regulation and deliberately exploit taxpayers. It was suggested that unless action – up to and including criminal prosecution – was taken swiftly against such practitioners, they would continue to act dishonestly.

Views on chapter 5: ‘Strengthening the controls on access to HMRC’s agent services’

The consultation proposed:

• that all tax practitioners wishing to interact with HMRC should be required to register with HMRC
• streamlining and automating HMRC’s processes for registering tax practitioners

More than 200 respondents provided feedback on these proposals.

Mandating registration (Question 4)

Question 4 asked respondents whether the government should mandate registration for tax practitioners who wish to interact with HMRC. Most respondents to the question (79%) agreed that the government should mandate registration with HMRC (Figure 2).

Figure 2: The percentage of yes, no, maybe or don’t know responses to the question of whether the government should mandate registration for tax practitioners who wish to interact with HMRC (Question 4). (n269)

Response	Percentage (%)
Yes	79
No	10
Maybe	10
Don’t know	1

Most of the professional bodies who responded to this question highlighted that making registration mandatory would help to develop a consistent approach across all services for tax practitioners, strengthen HMRC’s understanding of standards of service across all tax regimes and help HMRC to identify problematic behaviours and mitigate harm to taxpayers.

Respondents in favour of mandatory registration also suggested that the requirement could enhance the security of services for tax practitioners, deter unscrupulous actors and reassure clients about the reliability of their tax practitioners and their interactions with HMRC.

A small number of respondents, especially unaffiliated practitioners, disagreed with the proposal. Their primary concern was that HMRC would not be able to implement mandatory registration effectively, and they thought that the requirement would restrict access for tax practitioners wishing to access services without improving standards.

Many respondents agreed with the proposal to improve the registration process for access to HMRC’s tax practitioner systems and services. Streamlining and automating the process were seen by many as positive steps and vital components in delivering mandatory registration.

Others, including several who agreed with the proposal, felt that there was a risk of placing burdens on compliant tax practitioners without addressing current concerns, such as the misuse of registration credentials and tax practitioners hiding their activity by engaging with HMRC using their clients’ credentials.

Many respondents suggested that the registration requirement should be applied at the firm/business level, with some commenting that registration at the individual level would lead to increased administrative burdens and overall complexity.

Scope of mandatory registration (Question 5)

Question 5 asked for respondents’ views on the government’s intention to apply the requirement to all tax practitioners who interact with HMRC in a professional capacity.

The majority of respondents to this question agreed that the requirement should apply to tax practitioners who interact with HMRC. A small number of other respondents specifically highlighted their opposition to widening mandatory registration to include all tax practitioners, suggesting that it could result in professionals who do not principally advise on tax, such as solicitors, being included in the requirement.

In contrast, a few respondents, including some accounting firms and professional bodies, advocated going further by extending mandatory registration to all tax practitioners in the market, not just those who interact directly with HMRC. These respondents suggested that this could prevent bad actors from circumventing any registration requirement by ceasing to interact with HMRC.

Improving registration checks (Questions 6 and 7)

Questions 6 and 7 asked respondents for their views on whether there were additional or specific checks which HMRC should apply to tax practitioners at the point of registration.

Many respondents viewed registration as crucial to prevent abuse of the tax system and to maintain trust. Many respondents argued that additional registration criteria or checks should be introduced, but there were mixed views on which checks to apply and whether to apply the checks to all tax practitioners or on the basis of risk. Generally, respondents suggested carrying out checks related to an individual or firm’s compliance, business or practice history, such as criminal records and financial history checks. Other suggestions included introducing checks on professional qualifications to help gauge technical competence.

A minority of respondents suggested that HMRC should only carry out a small number of checks, such as enhanced Companies House checks, while other respondents suggested that HMRC should take a risk-based approach and assess each registration application on its own merits – such as checking the number of companies registered by an individual.

Figure 3: Respondents’ proposals for additional registration criteria and checks

Additional registration criteria and checks
Criminal records checks (for business owners, officers, managers)
Checks for previous anti-money laundering (AML) breaches
Specific checks for sole traders becoming incorporated
Declarations for bankruptcy/liquidation
Professional body affiliation and compliance history
Check for professional indemnity insurance (PII)
Tax filing/payment obligations
Understanding reasons for previous business closures
Declaration of conduct issues
Examination of previous outstanding debt
Disclosure of connected registrations
Checks with professional body misconduct
Internet searches and other background checks
Company website checks

Views on chapter 6: ‘Approaches to strengthening the regulatory framework’

The next chapter of the consultation asked about the design of any broader regulatory intervention.

Question 8 asked respondents which of 3 proposed regulatory approaches would best meet the objectives of a strengthened regulatory framework as detailed in the consultation:

• approach 1: mandatory membership of a recognised professional body with professional bodies monitoring and enforcing standards of their members and raising those standards where necessary
• approach 2: joint HMRC-industry enforcement (the hybrid model) to monitor and raise standards of the market
• approach 3: regulation by a government body that sets, monitors, enforces, and raises standards in the market

Of those that responded to this question, the majority (60%) thought that approach 1 would best meet the objectives set out in the consultation (Figure 4).

Figure 4: The percentage of respondents who thought approach 1, approach 2 or approach 3 would best meet the objectives (Question 8). (n271)

Approach	Respondents (%)
Approach 1	60
Approach 2	19
Approach 3	21

Respondents were asked to give reasons for their answer to Question 8. Question 9 asked respondents to provide views on the merits and problems of the 3 approaches. Common themes discussed by respondents for each of the approaches are set out below.

Approach 1: mandatory membership of a recognised professional body

Those in favour of this approach typically said that it would build on the existing oversight framework of professional bodies, particularly in relation to entry requirements, continuing professional development, professional standards and monitoring. Respondents also noted this approach would be less burdensome for the affiliated population of tax practitioners than the other 2 approaches and thought that unaffiliated practitioners should be able to find a professional body to accommodate their needs. Most of the professional bodies who responded advised they would be able to expand to accommodate increased membership but noted that this could lead to increased membership fees. However, there was a strong sentiment among respondents that professional bodies should not lower entry requirements to accommodate currently unaffiliated practitioners.

As to the limitations of this approach, a few respondents mentioned a possible conflict of interest, suggesting that professional bodies could favour retaining membership fees above appropriately monitoring and disciplining their members.

Furthermore, many unaffiliated practitioners who responded were not in favour of being required to join a professional body because of the perceived costs and burdens of membership. The most common concern cited was the financial burdens associated with professional body membership, with some suggesting that the costs could put substantial numbers of currently unaffiliated practitioners out of business, particularly those with small practices and those working part-time.

Many unaffiliated practitioners who responded said that if tax practitioners were required to get a qualification to become a member of a professional body, finding time to study in addition to running a business and satisfying the demands of clients would be unfeasible. Specific concerns included:

• several professional bodies do not allow those studying for entrance exams to work in practice at the same time
• a large proportion of the curricula of most professional bodies’ exams is irrelevant to tax practitioners working in niche or less complex areas of tax advice and services

Approach 2: Joint HMRC-industry enforcement

The fewest number of respondents to Question 8 chose joint HMRC-industry enforcement as the approach that would best meet the objectives. In general, respondents raised concerns about the potential conflicts of interest involved in HMRC taking on such a substantial regulatory role. Respondents said that practitioners needed to be able to challenge HMRC on behalf of clients without fear that HMRC could respond by misusing its regulatory powers.

However, 19% of respondents to Question 8 did favour this approach. In these respondents’ view, this approach would involve minimal upheaval for the professional bodies, as HMRC would take on regulation of many of the currently unaffiliated tax practitioners. Some unaffiliated practitioners also favoured this approach because they would not be required to join a professional body.

Approach 3: Regulation by a government body

The third approach was seen by many respondents as potentially the most expensive and burdensome option. However, some of those in favour of this approach commented that it would likely be the most beneficial in the longer term. In these respondents’ view, a government regulator would create a uniform and impartial regulatory framework for tax advice and services and provide consistency of application across the whole market. It would, in other words, create a level playing field. Another reason cited in favour of approach 3 was that it could, in some respondents’ view, improve routes for clients to raise complaints related to bad practice.

A few respondents favoured this approach on the basis that, in their view, it was the government’s responsibility to control the tax advice market, not the professional bodies’. However, respondents often emphasised that any regulatory body should be structurally independent from HMRC to avoid any conflict-of-interest concerns arising. Many unaffiliated practitioners preferred regulation by a government body (Figure 5).

Figure 5: The percentage of respondents not affiliated with a professional body who thought approach 1, approach 2 or approach 3 would best meet the objectives (Question 8). (n107)

Approach	Respondents (%)
Approach 1	23
Approach 2	35
Approach 3	42

However, many other respondents felt this would be the most burdensome approach. Specific concerns included:

• there could be substantial set-up and operational costs associated with a government regulator
• it would be an unnecessary administrative burden and bureaucracy as, in some respondents’ view, workable frameworks already existed within the professional bodies
• a new regulator might be disproportionate to the problems in the market and could negatively affect the considerable number of competent and honest practitioners for little perceived gain

Several professional bodies who responded to the consultation suggested that a regulatory body would struggle to attract and retain suitably qualified specialist staff because, in their view, there is an extremely limited pool of professionals with the knowledge and experience required to carry out quality assurance and monitoring work. Respondents suggested that these professionals could command higher wages in the private sector.

Question 10 asked respondents whether there were any other approaches to raising standards that the government should consider. Suggestions included:

• introducing of specialised exams to verify a level of competency within specific areas of tax, for example research and development reliefs, and to assist potential clients to identify specialists

• introducing protected titles such as ‘accountant’, ‘tax adviser’ and ‘tax practitioner’ (like ‘solicitor’ or ‘financial adviser’), to identify those with suitable qualifications and experience

• improving taxpayer education – respondents suggested that online resources and/or targeted communication campaigns could help to highlight areas of concern and potential red flags for taxpayers when seeking out tax practitioners

Some respondents objected to all the regulatory approaches consulted on. For these respondents, regulation would not make a difference as the unscrupulous practitioners would just ignore any new rules. Regulation would also, in these respondents’ view, unnecessarily add bureaucratic burdens to the compliant majority of the market. Some responses thought that smaller businesses and charities would be the most significantly affected by regulatory intervention and that a solution focused on specific problem areas should therefore be adopted, rather than one which, in these respondents’ view, would disproportionately affect the most vulnerable in the market.

Views on chapter 7: ‘Exploring how mandatory membership of a professional body could raise standards’

The next chapters of the consultation focused on approach 1 – mandatory membership of a professional body.

Question 11 asked respondents whether they thought membership of a professional body raises and maintains the standards of tax practitioners. Respondents were asked to give reasons for their answer. 56% of respondents to this question thought that membership of a professional body raises and maintains standards (Figure 6). Respondents highlighted the impact of study for professional body entrance exams, compulsory continuing professional development, and ongoing professional ethics training as major factors in raising standards, alongside the regular communication by professional bodies of relevant legislative changes. Conduct monitoring and the threat of sanctions were seen as key tools for maintaining long-term high standards within the professional bodies.

Figure 6: The percentage of responses to the question of whether membership with a professional body raises and maintains standards of tax practitioners (Question 11). (n255)

Response	Percentage (%)
Yes	56
No	29
Maybe	13
Don’t know	2

However, other respondents suggested that professional body membership did not raise and maintain standards of tax practitioners because, in their view:

• membership of a professional body was not a guarantee of high standards and, despite the presence of regulatory frameworks, some professional body members continued to engage in substandard or unethical practices
• continuing professional development was a ‘box-ticking exercise’ rather than a reliable reflection of members’ ongoing learning
• there are too few inspections by professional bodies of members each year

Only 11% of unaffiliated practitioners who responded to this question thought membership of a professional body raises or maintains standards (compared to 44% of those respondents affiliated to a professional body).

Question 12 asked respondents for their views on the capacity and capability of professional bodies to undertake greater supervision of tax practitioners. Questions 13 and 14 asked what more the professional bodies could do to uphold and raise the standards of their members and what additional costs professional bodies may face if strengthening their supervisory processes and/or taking on new members. Common themes discussed by respondents to these questions are explored below.

Eleven of the 14 professional bodies who responded to these questions thought there would be capability and capacity across the professional bodies to accommodate additional members. They were confident that existing systems for monitoring and enforcement could be scaled up to accommodate an increase in members, provided sufficient time was given to adapt. They acknowledged that expansion would require significant investment, which could be covered by either the membership fees of new members or increasing the fees of all members.

However, there were many respondents who doubted that the professional bodies could successfully manage increased members owing to what these respondents’ saw as the professional bodies’ already-stretched resources and low monitoring and inspection rates. For example, concerns were raised that smaller, less resourced professional bodies might struggle with increased membership and wider supervision, especially if the monitoring of members was not currently included within their framework.

A few respondents raised a further concern regarding the capability of professional bodies – in these respondents’ view, professional bodies were not incentivised to proactively monitor and supervise their members and had an interest in defending members’ actions when faced with customer complaints.

Respondents suggested that the professional bodies could uphold and raise the standards of their members by:

• making better use of communication and data – for example, sharing intelligence and best practice between professional bodies, increasing information sharing with HMRC, and using data to target supervisory resources
• expanding current monitoring procedures – such as undertaking more frequent practice assurance reviews and strengthening monitoring of members’ training and continuing professional development
• exploring models for redress/compensation to support clients of professional body members

Views on maintaining professional bodies’ high standards (Question 15)

Question 15 asked respondents about the best way to ensure current and new professional bodies maintained high standards.

Nearly a third of respondents to this question (including professional bodies, professional body members and unaffiliated practitioners) recommended an oversight body to regulate and enforce the standards of professional bodies. Two thirds of the same group suggested having a minimum set of criteria the professional bodies must meet to become a recognised professional body authorised to supervise tax practitioners. Suggested criteria included governance, ethical standards, enforcement capabilities and minimum educational requirements. The professional bodies who responded to this question warned that any additional costs incurred due to oversight could be passed on to members and their clients.

Views on routes for customer support (Questions 16 and 17)

Questions 16 and 17 asked respondents what role professional bodies could play in supporting the clients of their members and whether the government should consider strengthening customer support options beyond the current complaints processes offered by professional bodies.

Many respondents thought a complaints process should exist within all professional bodies as a route for clients of members to raise incidents of malpractice or incompetence. Some felt that the existing complaints processes in professional bodies were inadequate, with complaints, in their view, not always being taken seriously. Streamlined complaints processes and quicker resolutions of disputes were recommended.

Several respondents argued that the primary role of the professional bodies was to support their members and they should not be responsible for the welfare of practitioners’ clients. These respondents argued that dealing with customer complaints should be the role of an independent body.

The views of the professional bodies who responded to these questions were evenly split. Those who opposed strengthening customer support options argued that the professional bodies’ existing complaints processes, and the requirement for members of most professional bodies to hold adequate professional indemnity insurance, negated the need for additional support. These respondents also argued that administration and funding costs would be passed on to members and clients in increased fees. Professional bodies who agreed that customer support options should be strengthened argued that there was scope to develop enhanced sector-wide customer support options, with mention of a redress scheme or an ombudsman. One professional body suggested it would ensure the delivery of the government’s objective around providing confidence in the quality of tax advice and services that clients receive from tax practitioners and ensure that support is available to clients.

A small number of responses called for a method of financial redress, but others stated this was a matter for insurance and the courts.

Views on the role for HMRC/the government under approach 1 (Question 18)

Question 18 asked respondents what role HMRC and the government should play under the mandatory membership of a recognised professional body approach.

Over a third of respondents to this question, including nearly half of the professional bodies, said the government would be best placed to set minimum technical standards for tax practitioners and establish mechanisms to assess the suitability of professional bodies to become, and remain, authorised to supervise tax practitioners. HMRC was mentioned by many as potentially playing a key role in providing data and insight to professional bodies regarding their members’ conduct and to address emerging issues and trends. Almost 20% of respondents recommended no HMRC involvement.

Views on chapter 8: ‘How this approach could work: who should be regulated?’

Views on the application of the proposed model (Questions 19 and 20)

Question 19 asked respondents whether they agreed that the regulatory requirements should only apply to those practitioners who interact with HMRC. Just over half of respondents to this question disagreed (Figure 7).

Figure 7: The percentage of responses to the question of whether the requirement should only apply to those who interact with HMRC (Question 19). (n236)

Response	Percentage (%)
Yes	31
No	54
Maybe	8
Don’t know	7

Most respondents to this question said the requirements should apply to the entire tax advice market. This was because, in their view, the problems in the market extended beyond those who interact with HMRC – to address these problems adequately, the whole of the market would therefore need to be in scope. If not, there would be opportunities to exploit gaps in the regulatory framework which would reduce the effectiveness of regulation. Many respondents also felt that applying requirements to the whole market would create a level playing field.

Question 20 asked respondents whether they agreed that the requirements should only apply to controlling minds or principals of firms. Respondents were asked to give reasons for their answer.

Many respondents (44% – Figure 8) recommended regulation at a firm level, applying to controlling minds or principals, with many commenting that this would be the least burdensome approach.

Figure 8: The percentage of responses to the question of whether the requirement should only apply to controlling minds or principals of firms (Question 20). (n232)

Response	Percentage (%)
Yes	44
No	33
Maybe	15
Don’t know	8

Many thought that, by regulating firms, management would be motivated to ensure processes and systems throughout the firm complied with regulation, or else they would be held accountable for the actions of their staff. However, other respondents thought firm level regulation would provide opportunities for substandard or unscrupulous individuals to act under the radar.

A few respondents suggested that a combination of both firm and individual regulation would be the most robust regulatory approach and would leave no place for practitioners to hide, but it was also acknowledged that this approach could be the most burdensome.

Views on exclusions (Questions 21 to 24)

Questions 21 and 22 asked respondents whether there were any other regulated professions which should be excluded from the regulatory requirement, and how the government could ensure members of other regulated professions have high standards in their work providing tax advice and services.

Question 23 asked for respondents’ views on the government’s proposed exclusions to the regulatory requirement – members of other regulated professions, customs intermediaries, employment intermediaries, tax software developers. Question 24 asked whether some specific groups (charities, pro bono providers, promoters and enablers of tax avoidance, overseas practitioners) should be in scope of the requirement.

Many respondents thought duplicating regulation across professions would be inappropriate, unnecessary and/or would increase costs for customers without any additional benefit. However, the majority of the professional bodies who responded to these questions recommended including those already regulated in other professions because, in their view, it was not clear that regulators in other professions proactively responded to regulated professionals offering poor quality tax advice. Many professional body members reported seeing examples of legal practitioners offering tax advice and services that would not be acceptable under taxation codes of conduct (such as Professional Conduct in Relation to Taxation). Concerns were also expressed about the role of barristers’ opinions in promoting or justifying tax avoidance schemes.

Suggestions of how the government could ensure members of other regulated professions meet high standards when providing tax advice or services included:

• reviewing the adequacy of other professions’ regulatory arrangements in relation to the provision of tax advice and services specifically
• collaborating closely with the regulatory bodies overseeing regulated professions to establish and enforce standards specific to tax advice and services. This could align regulatory requirements and industry practices, ensuring consistent oversight and accountability
• regulatory bodies which oversee professionals who may also provide tax advice and services establishing transparent and accessible procedures for handling complaints related to these matters

In response to Question 24, there was general agreement among respondents that the groups listed should be in scope of any regulatory requirement. Those who responded to this question overwhelmingly agreed that offshore practitioners and promoters of tax avoidance schemes should be in scope (Figure 9). However, concerns were raised about the administrative and cost burdens regulation would place on charities and pro bono service providers and that these burdens could limit providers’ ability to support vulnerable groups.

Figure 9: The frequency with which respondents agreed that each of the named groups should be in scope of any requirement to become a member of a professional body (respondents could select all that they felt applied) (Question 24). (n194)

Named group	Frequency
Charities interacting with HMRC on behalf of taxpayers	120
Tax practitioners providing Pro-bono services	130
Promoters and enablers of tax avoidance	167
Overseas/offshore practitioners	157
Other	14

Views on the definition in legislation of a provider of tax advice and services (Questions 25 and 26)

Questions 25 and 26 asked respondents what the consequences of introducing a legal definition of a provider of tax advice and services could be and what gaps or issues they could see arising because of this definition.

Respondents to these questions were largely supportive of introducing a legal definition of a provider of tax advice and services. Respondents suggested that doing so would provide clarity and consistency across the market and provide a basis to ensure all practitioners in the market were held to the same standard.

However, concerns were raised that a legal definition of tax practitioner might not capture all of those it would intend to capture. Further issues identified by respondents included the risk of gaps when applying any new legal definition, owing to the perceived likelihood that some practitioners would try to circumvent the rules, and the risk of practitioners attempting to redefine their roles to avoid being caught by any definition.

Some respondents recommended that there should be consideration of how the definition could acknowledge the different types of roles tax practitioners undertake (for example, as accountants, bookkeepers, or advisers), particularly when considering how any minimum standards would be applied.

Views on chapter 9: ‘Implementation and next steps’

Questions 27 and 28 asked respondents how unaffiliated tax practitioners could be transitioned into professional body membership and whether a ‘legacy scheme’ should be adopted (Figure 10). Question 29 asked whether respondents agreed that a transition period of 3 years would give sufficient time for the market to adapt to the introduction of mandatory professional body membership. Question 30 asked what future developments would need to be accounted for in implementing mandatory professional body membership.

Respondents recognised the need to consider how the market adapted to any changes to the regulatory framework, with most respondents to these questions agreeing that a legacy scheme should be adopted and that a transition period would be necessary.

Figure 10. The percentage of responses to the question of whether a legacy scheme should be adopted (Question 28). (n219)

Response	Percentage (%)
Yes	51
No	17
Maybe	17
Don’t know	15

In respect of transitioning unaffiliated practitioners into professional body membership, respondents questioned whether more flexible routes to membership would be required. For example, concerns were raised about the demand placed on the practitioner from continuing to work and run a business at the same time as obtaining membership of a professional body and the negative impact it could have on the quality of advice given. Respondents highlighted the importance of recognising that many tax practitioners have significant industry experience, which could be used to determine proficiency as an alternative to the formal qualifications currently required by professional bodies. Others suggested tiered membership options, or a simple one-off entrance exam to test competency. However, some professional body members added that overall standards should not be lowered and all new applicants to professional bodies should have to pass the same examinations.

Respondents believed a legacy scheme would facilitate a smooth transition for existing tax practitioners to meet the requirements for professional body membership and ensure high-quality tax advice could be maintained and market disruption minimised. A few respondents expressed concerns about the implementation of a legacy scheme and recommended that its parameters should be carefully considered to avoid confusion and uncertainty. For example, by restricting the scheme only to those already registered with HMRC and setting a time limit for the legacy scheme period.

While there was general agreement that a transition period would be necessary, over a third of respondents – including two thirds of the professional bodies who responded – thought that a transition period of 3 years would be insufficient time for the market to adapt. Many of these respondents expressed the view that the transition period should be at least 5 years.

Most of those respondents who believed a 3-year transition period would be insufficient referenced the time and resource required to complete professional qualifications to meet professional body membership requirements. Some respondents also argued that 3 years would not be enough time for professional bodies to review and increase their resources to handle the new members and establish rules for entry.

Finally, when asked about how to ensure that the regulatory framework considers future developments, respondents emphasised:

• sharing evidence and information between HMRC and professional bodies to identify where members fall short of acceptable standards, so that action can be taken
• the perceived need for oversight of the professional bodies to ensure they are adhering to an aligned set of standards and effectively monitoring their members’ work
• ensuring all tax practitioners have a professional body to join
• continued monitoring of the market to detect and tackle any issues arising

Annex: List of stakeholders consulted

Note: this list does not include responses from individuals.

• 11 Elements Ltd
• Association of British Insurers
• A D Accounting Ltd
• A1 Accounting Solution Ltd
• Abbotstones
• ABC Accounting Services
• Abell Limited
• Acc&Tax Ltd
• Accountability
• Accountancy Assist
• ACE Support
• Acorn Accounting for Business Ltd
• Ad Valorem Accountancy Services Ltd
• Agent Armour Accounts Ltd
• AK Employment Tax Services Ltd
• AK Tax & Accountancy Ltd
• Alan Sacks & Co
• Alan Silverstein & Co
• Alexander & Co (Accountancy) Ltd
• Allen Personal Tax Associates
• Amherst Accountancy Ltd
• Association of Accounting Technicians
• Association of Chartered Certified Accountants
• Association of Consulting Actuaries
• Association of International Accountants
• Association of Taxation Technicians
• ATC Advisors
• Avalon Tax
• AW Tax Service Ltd
• Ayming UK
• Azets
• Azets Holdings Ltd
• Baccma Consulting
• Bar Standards Board
• BDO LLP
• Beacon Tax Solutions Ltd
• Beds, Bucks & Herts Society of Chartered Accountants
• Beyond Here Consulting Ltd
• BJ Accounting Solutions
• Blackbooks Accountancy Ltd
• Brian Nuttgens Accountants Ltd
• Brilliant Accountants Ltd
• Brooms Professional Services Ltd
• Bruce Roberts & Co Ltd
• Business Partners
• Butterworth Barlow
• C R Jones & Co
• C&H Stedman
• Caesium International
• Carpenter Box
• Caton Fry & Co Limited
• Certified Public Accountants Association
• Charities Aid Foundation
• Charity Law Association Tax Committee
• Chartered Accountants Ireland
• Chartered Institute of Management Accountants
• Chartered Institute of Payroll Professionals
• Chartered Institute of Taxation
• Christopher Thacker Tax & Accountancy Services
• Chudley Stone
• City of London Law Society
• Clarkson Accountancy Ltd
• Clive Owen LLP
• CMcGee Ltd
• Compliance for Accountants Ltd
• Confederation of British Industry
• Convatec
• Cooke & Co
• Creative Tax Reliefs Ltd
• CSM tax consulting
• Customs Practitioner’s Group
• D A Locke & Co Chartered Accountants
• Deloitte
• DNA Accountants
• Donaldson & Thompson Chartered Accountants
• Dudley Gore & Co
• DWM & Co Ltd
• Eacotts
• East Coast Accounting Services Ltd
• EBS Ltd
• Elaga Accountancy Ltd
• EmpowerRD Ltd
• EPIC Taxation Services Ltd
• Ernst & Young
• Essar Accountants
• Euro Ashfords
• Euro Contacts GB Ltd
• Excel Accountancy Services Ltd
• Fairway Accountants Ltd
• Faith in Finance Ltd
• Fani Azikri Ltd
• Farndale Financial Consultants
• Federation of Small Businesses
• Fiscale Ltd
• Flawless Beauty Accounting Ltd
• GBLE Ltd
• Goldwells Ltd
• Grant Thornton
• Hall Barn Consultants Ltd
• Harrington & Horne Financial Services Ltd
• Hate Paying Tax Ltd
• Hidenda Tax Ltd/Harwood Claims Management Ltd
• Hills & Co
• HJ Bookkeeping Solutions
• HLP Ltd
• Humdani & Co
• HW Tax and Accounting
• Institute and Faculty of Actuaries
• Institute of Accountants and Bookkeepers
• Institute of Certified Bookkeepers
• Institute of Chartered Accountants in England and Wales
• Institute of Chartered Accountants of Scotland
• Institute of Financial Accountants
• Integrated Accounts Ltd
• J M Prescott & Co Ltd
• Jackie Russell Accounting
• Jackson Accountants
• Jadmin Services Ltd
• Jane Evans Taxation Ltd
• Jenner’s
• Jennifer Copley Finance
• JFS Torbitt
• JMH Financial Services
• Karen Eason Certified Accountant Ltd
• Karen Eckstein Ltd
• Katie Sauvage Accountancy Services Ltd
• Keenan Chartered Accountants
• Kendall Wadley LLP
• KEW Accountants & Tax Specialists Ltd
• Kinnaird Hill
• KLS Accountancy Services
• KMA Accountants Ltd
• KMA Spotlight
• Knowles Warwick Accountants
• KPMG
• KRW Accountants
• Kwan Chan & Co
• Landlords Tax Services Ltd
• Law Society of Scotland
• Legal and General
• Leyton UK
• Libratum Accountancy
• Lloyds
• Logicos Financial Planning Ltd
• London Society of Chartered Accountants
• Low Incomes Tax Reform Group
• LS Gold & Co
• Lyn Williams Accountancy Services
• M.A.B. Accountant Ltd
• M2 Chartered Accountants
• Manor House Bookkeeping
• Mark Peters VAT Associates Ltd
• Martin Bridges and Co
• Martin Thomas & Co
• Martyn Fiddler
• Maton Tax Accounting Ltd
• Mazars
• MBS Accountancy Services Ltd
• MDG Services Ltd
• Melanie Sampson Consulting
• Mercer
• Mezzle Ltd
• MHA
• MJ Accounting
• Money Advice Scotland
• Mooney Matthews
• Moore Financial Management
• Moore Kingston Smith
• Mouktaris & Co Ltd
• My-Hub Ltd
• N & M Financial Services Ltd
• Nelson Accountancy Services
• Nineteen Accountants Ltd
• NL Accountancy & Bookkeeping Services
• NRA Accountancy & Taxation Services
• Oblako Ltd
• Oldfield Advisory
• Oliver and Co. CA Ltd
• On The Books Ltd
• On The Spot Tax Ltd
• Onyx Accounting
• Orange Umbrella
• Original Accountancy Limited
• Oyelakin Mustapha & Associates
• P and J Accounting Services Ltd
• Papertrail Bookkeeping Ltd
• Pareto Consultancy Ltd
• Payroll Options
• Pensions Administration Standards Association
• Pensions Management Institute
• Peplows Limited
• Peter Dawson Tax Consultants Ltd
• Porter and Gorton
• PricewaterhouseCoopers
• Primus Accounting Ltd
• Professional Conduct in Relation to Taxation bodies
• PTS Stockport Ltd
• Quadrus Accountancy Ltd
• Quality Accountancy Ltd
• Qureshi and Associates
• R A Network Partnership Ltd
• R Vann Ltd
• Radcot Ltd
• Randall & Payne
• Rawlinson Pryde & Partners
• RB Taxation Services
• RDA
• RDP Associates
• Realtax Ltd
• Resourceful Bookkeeping Ltd
• Revenue Bar Association
• Revenue Scotland
• Richardson Swift
• Right Track IBS Ltd
• Robert Turnbull Tax Consultants
• Rodney Pangbourne Chartered Accountants
• Roper & Co Ltd
• Royal National Institute of Blind People
• RSM UK
• Ryan
• Saffery
• Savills
• SD Worx
• SEB
• Sheila Barnes Accountancy Services
• Shepherd Partnership Ltd
• Shorts
• Skyon Ltd
• SMO & Co Chartered Certified Accountants
• Society of Pension Professionals
• Society of Trust and Estate Practitioners
• Somerset Accountancy and Tax Services
• Source Advisers Ltd
• Spencer Accounting Services
• Spotlight Accounting Ltd
• Spring Consultancy Ltd
• Stephen Farra Associates
• StepUpcmg Ltd
• Sterling Tax Services Ltd
• Stiles & Co
• Stockport Accountancy Services Ltd
• Sturgess and Co Ltd
• Surrey Taxation Services
• Sussex Business Services Ltd
• Swaby Financial Services Ltd
• Swift Accounting & Bookkeeping Services Ltd
• T&C Site Services Ltd
• Tax Advice Network
• Tax Bee Ltd
• Tax Policy Associates Ltd
• Tax Solutions Scotland Ltd
• TaxAssist
• Taxation Disciplinary Board
• Taxsolvers Ltd
• TaxWatch
• Taylor & Thomson Ltd
• Taylor-Made Accountancy Ltd
• TBAT Innovation
• TC Group
• Tee Accounts Ltd
• TEVEA RF Consulting
• The Investment Association
• The Law Society
• The MHH Partnership
• The Orenda Collective Ltd
• The R and D Community Ltd
• The Tax Lady
• The Tax Team
• The VAT People Limited
• TidyCloud Accounting Ltd
• Tim Phillips & Co
• Transfer Pricing Solutions Ltd
• Troubleshooters
• TT Tax
• TW Accountancy Services Ltd
• UBT Accountants Ltd
• UK Finance
• V Plus Accounting
• Valleys Accounting Ltd
• Veritons Ltd
• Vialto Partners
• virtualaccountingservices.net Ltd
• W Wilson Millar Ltd
• Walter Wright
• WAMS Tax Ltd
• Wandsworth Investments Ltd
• WHA
• Whitecross Accountancy Ltd
• Wilson Hibbert & Co Ltd
• Wong Lange & Co
• Z J Accounting Services
• Zest Accountants Ltd

Responses were also received from 130 individuals.