Sarah Saunders

Written by: Sarah Saunders

Sarah Saunders

Personal Tax Manager

When is a tax adviser not a tax adviser?

Many people would be shocked to learn that there is no regulation of who can call themselves a tax adviser. Anyone, with zero qualifications or knowledge of tax could offer tax advice without breaking any law. To be recognised by HMRC you only need to register and submit to money-laundering regulations. 30 per cent of recognised agents are not members of a professional organisation.

This is a frightening fact which can have devastating consequences for the unwitting clients of unqualified tax advisers. The UK tax system is one of the most complex in the world, and errors can be very expensive. 

Qualified tax advisers are required by their Institutes to:

  • carry out a certain level of continuing education to keep up with the ever-changing tax law;
  • have professional indemnity insurance to help compensate clients in the event of an error;
  • follow a clear code of conduct; and
  • if they are sole practitioners, they are expected to arrange a successor should they be unable to continue.

These requirements serve to add extra layers of protection for clients.

There are undeniably many very competent tax advisers qualified by experience, but the public needs to be protected from those who either overestimate their skills, or merely want to get fees from their clients without regard for the clients’ best interests. HMRC is often aware of ‘problem’ advisers and tries to help them improve, but unless the situation is extreme HMRC cannot refuse to deal with an adviser.

HMRC is conducting a consultation to decide whether more regulation is necessary to protect taxpayers. It will also consider who should regulate the profession. Options being considered include the existing Chartered Institute of Taxation, the legal profession or a government agency.

More regulation seems advisable, but care needs to be taken. We would hope that:

  • introduction is slow enough to allow affected practitioners to conform to any new rules;
  • regulation is not duplicated so that those already regulated have to conform to two sets of rules;
  • this does not produce a two-tier system; and
  • the costs of regulation are not excessive.

If these conditions can be met, they should improve the position of taxpayers in future.

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