HMRC has published a consultation – closing on 28 May – on raising standards in the tax advice market. The call for evidence asks for views and evidence on several issues including:
- the scope of the market for tax advice and services
- the characteristics of good and bad practice
- current government interventions
- international models
- possible approaches to raising standards.
The document notes that HMRC carries out direct compliance interventions that target poor adviser behaviour and competence. Examples include “HMRC carries out activity to look at charity agents and representatives suspected of abusing the Gift Aid repayment scheme. These activities have identified a range of inaccuracies with some relating to the agent acting dishonestly and some due to lack of due diligence or professionalism. HMRC provides education to agents on the standards it expects. HMRC works with the Charity Commission to inform charity trustees of HMRC’s agent standard so that the trustees can be better informed when choosing an agent.”
Question about the HMRC Standard for Agents
1.Is the HMRC Standard for agents comprehensive enough to provide a baseline standard for all tax advisers?
Questions about the tax advice and services market
2. What clear distinction can be drawn between tax advice and tax services?
3. From your professional point of view, how do standards differ between different types of tax advice? Could you provide examples?
4. Please share any data which would help develop assumptions on the market share, volumes or impact or on the value added by different sectors of the market?
Questions about good advisers
5. What more could the government do to promote the work of good advisers?
6. Where else do good agents add value – for customers, HMRC and the wider economy?
How could this be extended further?
7. What are the general characteristics of good and bad advisers?
Questions on the impact of poor advisers
8. Are there any parts of the tax advice market where there are particular problems? Please share any evidence you have.
9. Do you have any evidence about the impacts of unqualified agents or agents that don’t meet standards?
10. How could HMRC and the professional agent community work together to identify poor practice at an early stage?
Questions on interventions
11. How effective are HMRC’s recent interventions? Are there other interventions that the government should be using to tackle poor practice?
12. Is there more that HMRC could do to manage agent performance through its transactional services (such as IT systems)?
Questions about consumer protection
13. How might increasing consumer protection affect individuals taking responsibility for their own tax affairs, and what behavioural changes might you anticipate?
14. Who should take the primary role in improving consumer protection, government, the profession, or another third party?
15. What do professional bodies currently do in respect of customers who need extra support?
Questions on other market interventions
16. Is there anything useful the government can learn from other examples of market intervention, including those led by industry?
17. Are there other enforcement or regulatory agencies that you think should have a role in this area, and what are the advantages, disadvantages, benefits or risks of any of these
organisations taking on a regulatory role?
Question on international models
18. Do you know of examples of effective law, or enforcement, from other countries or jurisdictions?
Question about the future
19. What future changes do you consider will most impact the standards expected of the tax advice profession?
Questions on Option A
20. What other examples are there of existing powers (HMRC or other government powers) that could be used to tackle poor tax adviser behaviour?
21. What is your view of the effectiveness of HMRC’s current powers?
Question on Option B
22. What evidence do you have of problems clients have experienced due to lack of redress and what solutions would you propose?
Question on Option C
23. How could consumers be helped to make better choices?
Question on Option D
24. Are there any circumstances where a penalty should be levied on the adviser instead of, or in addition to, the client?
Question on Option E
25. What scope is there for the professional bodies to take on a greater regulatory role in a similar way to anti-money laundering (AML) supervision? (where some professional bodies supervise their members and the professional body in turn is supervised by the Office for Professional body AML Supervision (or OPBAS) within the Financial Conduct Authority)
Questions on Option F
26. What would the impacts be of introducing external regulation, particularly on clients and on those agents already meeting high standards?
27. Are there any existing bodies that might be well-placed to act as regulator? What potential conflicts of interest could you see?
General questions about the options
28. The government is particularly interested in views on the following questions:
- the benefits of the options set out above
- whether there are sectors or types of tax advisers which would face particular challenges, and what those challenges would be
- views on the impacts of each option, for example:
- costs for customers, advisers or other costs
- impacts on any particular groups effects on competition and the paid tax advice market
- how any impacts could be mitigated behavioural effects – what might advisers or customers do in response?
- alternative options which meet the objectives outlined above.
Question on next steps
29. Can you suggest or support any other activities which should be considered?
30. What market failures need to be addressed?
31. What evidence is there that will enable understanding of customer and agent behaviour and likely responses to any intervention?