There is no qualification requirement for tax advisers

05 Nov 2024

When obtaining formal VAT advice on a proposed transaction, you might be forgiven for assuming that the person reaching providing the tax advice would be required to have:

• Qualifications;
• Experience;
• An obligation to complete regular “continuous professional development” (CPD); and
• suitable insurance in the event of problems arising.

Sadly (and surprisingly) these reasonable expectations are not grounded in fact. There is currently no legal requirement in the UK (or in the majority of the EU) for someone who advertises tax advisory services to hold any qualifications at all. In the UK, for example, membership of any professional tax advisory body is not compulsory and there is no central register of tax advisers.

As the provision of tax advice is not formally regulated, anyone can present themselves as a ‘tax adviser.’ The only actual legal requirement is to set up for Anti Money Laundering (AML) supervision with either HMRC or a professional body supervisor. However, even this does not include any obligation to demonstrate minimum standards of competence. Consequently, clients who are affected by substandard or unscrupulous tax practitioners often have no clear route to seek support or compensation.

Unreliable advice

When a business or individual makes good faith and concerted efforts to ensure they meet their tax obligations by taking tax advice, we believe they should be able to guarantee that the paid for advice can be relied upon.

A genuinely qualified tax adviser may come from various specific disciplines or backgrounds. For example, in France, the Netherlands and Switzerland tax advisers usually come from the legal profession, whereas in the UK, Italy and Ireland it is more common for advisers to come from an accountancy background. Unusually in Germany, tax advice is treated as a “reserved task” (Vorbehaltsaufgabe), which may only be performed by licensed professionals.

There is no overarching guarantee as to the quality of the work performed elsewhere.

We must stress that many tax advisers have qualifications and also benefit from:

1. Years of experience, either via the local tax authority such as HMRC, or via accountancy firms;
2. Supervision by peers;
3. Membership of official bodies such as the Association of Chartered Certified Accountants (ACCA), the Chartered Institute of Taxation (CIOT), the Institute of Chartered Accountants in England and Wales (ICAEW), and the Association of Accounting Technicians (AAT), amongst others.

These professional bodies have produced a “Professional Conduct in Relation to Taxation” (PCRT) policy to govern advisers’ behaviour and practice. However outside of membership of these professional bodies this is only a voluntary code and is not enforceable.

Official concern and changes proposed

More recently the fact there is no legal requirement to hold any form of qualification when advertising or performing tax advisory services has become an issue of greater focus for the tax authorities in both the UK/EU. This increased concern is possibly because of the risk to the taxpaying public, but, in our perhaps cynical opinion, more likely because of government concern over tax avoidance schemes promulgated by the less scrupulous, and less qualified tax practitioners.

Such schemes are even finding their way onto Tik Tok often with the claim that such advice is backed by a barrister’s opinion online. Caveat emptor, indeed!

In the European Union

In the EU a report was produced in mid-2022 by the EU Fisc subcommittee initially focusing on four countries, entitled “Regulation of intermediaries, including tax advisers, in the EU/Member States and best practices from inside and outside the EU”. The key focus was on resolving tax avoidance issues rather than the impact on the taxpaying public and stated:

“There is some suggestion that the bulk of tax evasion/undesirable tax avoidance enabling activities may be occurring among the small pool of tax advisers who are not members of any professional bodies. Regulation needs to be targeted to be able to identify this small pool of advisers along with imposing relevant sanctions.”

The next steps proposed were for a more in-depth analysis of a wider group of EU countries to get a better understanding of the situation across the region.

In the United Kingdom

In the meantime, the UK Government is also looking at options to update the regulatory framework for tax advisers, after a call for evidence from all affected parties. The options under consideration are:

• Mandatory membership of a recognised professional body.
• Joint enforcement by HMRC and the industry; and
• regulation by a separate statutory government body.

The accounting professional bodies would obviously prefer the first option, not least because this will lean into the existing CPD framework, will require advisers to hold Professional Indemnity Insurance (PII) and will enforce compliance with the already existing PCRT. This will also allow enforcement of professional standards and if necessary, the imposition of disciplinary procedures.

Update on UK Consultation

The HMRC consultation ‘Raising standards in the tax advice market – strengthening the regulatory framework and improving registration’, referred to above, which ran from March-May 2024 received strong engagement from a diverse range of stakeholders.

The summary of the responses received has now been published and can be found here.

Overall, responses to the consultation were supportive of government action to raise standards in the tax advice market. The government has announced its plans to consider options to strengthen the broader regulatory framework in the tax advice market.

Amongst the options that the Government is now looking at are:

• a further consultation on enhanced powers and sanctions for HMRC to act against tax advisers to facilitate taxpayer non-compliance, and
• an approach to strengthening the broader regulatory framework in the tax advice market.

Responses varied when it came to the exact action to be taken, and the Government commentary states that: “The government will … continue to work closely with the sector to consider options to strengthen the regulatory framework for tax advisers.” No details are yet available but it is clear that the UK Government is keen to make progress on this issue in the near future.

Watch this space!

Our view

From the perspective of Martyn Fiddler and our specialist team of tax advisers we can reassure you that all of our advisers are formally qualified members of the CIOT and have nearly eighty years’ experience between them. In addition, the only non-tax adviser member of the Martyn Fiddler Tax Limited board is a qualified lawyer.

We take our responsibilities extremely seriously and are totally focused on providing the best and most accurate services to our clients, always within the letters of the law.

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