HMRC should not have the power to regulate tax advisors as judge, jury and executioner, say leading audit, tax and business advisory firm, Blick Rothenberg.
Fiona Fernie, a Partner at the firm, said, “The new Finance Act is effectively regulation of tax advisors. It mandates that advisors must be registered with HMRC before interacting with them in relation to the tax affairs of a client.
“If advisors violate this rule, they could face a fine of £5000.
“This means HMRC is now the judge, jury and executioner for tax advisors, which is wholly inappropriate.”
She added, “Any regulation in this area needs to be totally independent and apply to advisers and HMRC equally.
At the moment tax advisers provide checks and balances in cases where HMRC may be acting inappropriately, which is good not only for advisors and their clients, but HMRC too. HMRC can revoke tax advisors’ registration with them, which I hope they would not do without good reason. However, the possibility of being deregistered and the fines advisors could face may have a chilling effect on their willingness to speak up when HMRC makes a mistake. This would threaten the beneficial relationship between advisors and HMRC.”
She added: “The idea of tax advisors being regulated by HMRC has been mooted before and rejected, not least because of the view that properly qualified tax advisers are already regulated by their professional bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW) and The Chartered Institute of Taxation (CIOT.)
“Further regulation of tax advisors is not inherently a bad idea, particularly if it can reduce the instances of advisers promoting egregious tax schemes. However, HMRC is not the right organisation to do this, and certainly should not have this much power over advisors.”
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