HMRC has updated its tax standard for agents and accountants to include requirements for providing advice on tax planning, stressing that individuals must not promote artificial tax planning arrangements that exploit gaps in legislation
When providing tax planning advice HMRC expects agents and accountants to act lawfully and make their clients aware where there is material uncertainty in the law, ie, if HMRC’s view is unknown.
The standard states that agents must not create, encourage or promote tax planning arrangements that:
- set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation, and
- are highly artificial or highly contrived and seek to exploit shortcomings in the relevant legislation.
Although HMRC does not regulate agents or accountants and the standard is not mandatory, the tax authority has several powers to address poor agent practice and breach of the standard. It is able to disclose cases of suspected agent misconduct to the relevant professional body for them to investigate further and consider disciplinary action.
HMRC can also refuse to deal with an agent and apply civil penalties where tax agents have found to be dishonest. Agents may also have their access to certain online services suspended.
In March 2017, the Professional Conduct in Relation to Taxation (PCRT) came into force which sets out clear professional standards in relation to the facilitation and promotion of tax avoidance. The PCRT must be adhered to by all members of the seven institutes who have signed up to the code, but does not cover non-members nor does it have a statutory basis.
HMRC admits that its ‘much briefer summary’ does not place further requirements on agents and accountants who are covered by the PCRT and says it will ‘continue to work with professional bodies to agree a single common standard for all agents’.
Out of the five fundamental principles in PCRT, three are repeated in HMRC’s standard. These are integrity, professional competence, due care and professional behaviour. The two that are not included are objectivity and confidentiality.
John Cullinane, CIOT Tax Policy Director, said: 'We welcome HMRC’s recognition of the value of having professional agents help taxpayers comply with their tax obligations and we broadly support the HMRC initiative here to seek to enforce high standards for paid tax agents, particularly those who are not members of PCRT bodies. This can only benefit the tax system generally and might helpfully avoid any potential race to the bottom in terms of standards of service by agents to the public.'
Report by Amy Austin
