Earlier this month we highlighted in our Spring Budget 2024 coverage that HMRC had finally launched its long planned consultation on “Raising standards in the tax advice market” which examines three options to strengthen the tax agent regulatory framework in the UK and would also require tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. This consultation will close on 29 May 2024. This week we take a look at the first option set out in the consultation for potential regulation of paid tax agents, mandatory membership of a recognised professional body, and encourage you to share your views by Tuesday 7 May 2024 to enable members views to be reflected in the Institute’s response. Next week will set out more information on option two.
Mandatory membership of a recognised professional body
This option is clearly the option which HMRC are leaning towards, but they recognise that this will depend on “the capacity and willingness” of the Professional Bodies to do so, including this Institute.
Chapter 7 (including questions 11-18) of the consultation examines this option in detail. This would involve mandatory membership of a recognised professional body with professional bodies monitoring and enforcing standards of their members and raising those standards where necessary.
Taking forward this approach would mean tax practitioners must hold membership of a professional body that is recognised as having an adequate minimum standard for its members and an adequate supervisory framework to monitor and enforce that standard.
The government considers this approach to be proportionate to the problems observed and opportunities afforded. In its view it “minimises extra costs and burdens to tax practitioners who currently meet expected standards and most professional bodies currently deliver the 3 components of a regulatory framework: subjecting their tax practitioner members to minimum standards, monitoring and enforcement action; and offering routes for customer support.”
“The government recognises there may be costs for the professional bodies in extending their supervisory frameworks to new members, with the potential for these to be passed on to clients via increased membership fees. The government will explore how best to mitigate this.
The government considers that enhancing and extending the supervisory framework operated by the professional bodies to this population of tax practitioners could achieve its aim of raising standards. However, it is dependent on the willingness and capacity of professional bodies to both strengthen the regulatory framework to raise standards of their current members who do not meet expected standards and extend membership to new members.”
The consultation also presents evidence in Annex C which according to HMRC shows that there are levels of non-compliance amongst taxpayers represented by affiliated tax practitioners. “This is why the government is looking to explore whether the regulatory frameworks currently in place across professional bodies are strong enough to raise standards in the tax advice market if the government chooses to proceed with this approach.
The government therefore wishes to work with professional bodies to understand their capacity and capability to raise standards across the market and seeks views on key questions to inform how mandatory professional body membership could be implemented in a way that best meets the objectives.
Findings from this consultation will inform whether the government pursues the introduction of mandatory professional body membership or whether another approach, such as regulation by a government body (option 3) should be pursued.”
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