Consultation response: Enhancing HMRC's powers: tackling tax advisers facilitating non-compliance
The ATT has responded to the HMRC discussion document ‘Enhancing HMRC’s powers: Tackling tax advisers facilitating non-compliance’ (‘the Consultation’) which was issued on 26 March 2025.
The Consultation discussed options to enhance HMRC’s powers and sanctions to take swifter and stronger action against professional tax advisers who facilitate non-compliance in their client’s tax affairs. It proposed a complementary suite of potential measures to more effectively review and sanction professional tax advisers whose actions contribute to the tax gap or otherwise harms the tax system.
In our response, we commented on each aspect of the Consultation as follows:
Exploring the Proposals
The fact that there remain ‘wilfully incompetent’ and ‘dishonest’ tax advisers servicing the tax needs and requirements of some taxpayers causing harm to the tax system would suggest that HMRC could still do more to tackle both these groups of tax advisers. There is already a significant body of law available to HMRC to tackle both incompetent and dishonest tax advisers. We would urge HMRC to fully assess and utilise these provisions before rushing to add more legislation to the statute.
Enhancing powers to enable HMRC to investigate and request information from tax advisers
We do not agree that HMRC should be granted easier access to information from tax advisers based solely on a 'reasonable suspicion' that the adviser has facilitated an inaccuracy in a taxpayer’s document or return. Our concern lies primarily with the vague and potentially subjective definition of 'reasonable suspicion’, but we also have concerns about the ambiguity around what constitutes 'facilitation of an inaccuracy,' and the risk that some compliance officers may use this lower threshold to justify unwarranted inquiries into unco-operative tax advisers.
Enhancing financial penalties for tax advisers who cause harm to the tax system
We do not have statistical data to comment on the adequacy of the current penalties when considering whether they are a deterrent against harm to the tax system by tax advisers. However, we consider that the current financial penalty for dishonest conduct (ranging from £5,000 to £50,000) could be seen by some unscrupulous tax advisers as being an acceptable cost of doing business and built into their financial modelling. We therefore support the review of the penalty provisions.
Broadening disclosure of HMRC’s concerns about tax advisers to professional bodies
We support efforts that could make it easier and faster for both HMRC and the professional bodies to respond to and address sub-standard behaviour and work by tax advisers at an earlier stage (even where this does not constitute misconduct, but still causes harm to the tax system), which could reduce the level of future damage being caused by some tax advisers.
Broadening the scope of publication of tax adviser details when they are the subject of an HMRC sanction
We believe that it is in the public interest for HMRC to publish more information about its activities. This could help taxpayers to be better informed about the choice of tax adviser by knowing which tax advisers are subject to sanctions or have had limitations imposed on their ability to act effectively for clients. The procedure for making a publication needs to be robust with adequate safeguards given the potential reputational and commercial ramifications to the tax adviser of having their details published.