HMRC has published a consultation – closing 15 June – on the proposal that everyone who provides tax advice should hold professional indemnity insurance, as well as views on a definition of tax advice. The consultation questions are reproduced below.

Q1: In your opinion, would introducing a requirement for anyone providing tax advice to have
professional indemnity insurance satisfy the policy aims of improving trust in the tax advice
market, by targeting poor behaviour and allowing taxpayers greater redress when things go
wrong?
Q2: If the government introduces the requirement for professional indemnity insurance, what
further steps would you recommend?
Q3: Are there any alternative options you would recommend?
Q4: Apart from the costs and potential effects outlined above, are there any other costs you
foresee for advisers?
Q5. What are your experiences of obtaining professional indemnity insurance or of the
market for professional indemnity insurance?
Q6. If you are a tax adviser who practices without insurance, why is this?
Q7. What factors do you take into account when pricing professional indemnity insurance?
Q8. What are your views on the government’s proposals for making information on promoters
public? How would having more information about promoters of tax avoidance help you in
making decisions about pricing or offering insurance?
Q9: In your opinion, does the insurance market have the appetite and capacity to manage
the new requirement?
Q10. What checks do you carry out when you engage a tax adviser? Do you check whether
they are insured?
Q11. Do you have any experience of making claims or complaints against a tax adviser for
bad advice that you would be happy to share with us?
Q12. Do you think there are any lessons on how complaints are handled in similar industries
that we can learn to help improve redress?
Q13. What is the minimum level of cover you recommend, and why?
Q14. What activities should it be mandatory to cover, and why?
Q15. Should the government set mandatory minimum or maximum levels of:
– cover
– run-off cover
– excess
Q16. What levels should these be?

Q17. Should the government specify what advice must be covered by the policy? What
advice do you think should be covered?
Q18. Are there any other insurance requirements the government should require?
Q19. Who should be required to hold the insurance? Should it be the firm, the principal,
everyone who is acting as a tax adviser?
Q20. What impact do you think setting minimum mandatory levels of cover would have on:
– the market including availability of insurance
– affordability
Q21. We intend to model the definition of who the requirement will apply to on one of the
definitions currently extant in legislation. What a) benefits and b) issues are there with using
the Dishonest Tax Agent definition or the Money Laundering regulations definition? Do you
have a preference or alternative and why?
Q22. What activities do you think should be excluded from the requirement for compulsory
professional indemnity insurance and why?
Q23. Would there be any benefit in having different minimum requirements for different
activities?
Q24. What benefits or issues would there be in considering the financial services regulatory
distinction between advice and guidance for tax advice?
Q25. What benefits or difficulties do you foresee with the inclusion of a provision around UK
taxation in the definition?
Q26. Do you agree with the 3 elements of enforcement?
Q27. What are your views on the enforcement options described above?
Q28. Do you agree that advisers who already hold professional indemnity insurance as it is
required by their professional or regulatory body should automatically satisfy the new
requirement? How could we check?
Q29. The government’s ambition is for HMRC to share information about the adviser with the
client digitally. What are your views of this?
Q30. What effects do you foresee of introducing the requirement for everyone at the same
time?