Finance Bill 2025-26 briefing: Conduct of Tax Advisers, amendments to schedule 38 Finance Act 2012

The ATT has produced a Finance Bill 2025-26 briefing on clause 247 and Schedule 21 which makes significant amendments to Schedule 38 Finance Act 2012, substantially strengthening HMRC’s powers to take action against tax advisers who facilitate non-compliance.

A regime that was originally narrow and targeted at dishonest tax agents would be recast as a much broader conduct-based framework applying to almost anyone who assists with tax affairs, supported by significantly enhanced information powers, penalties provisions and a mandatory publication regime. These changes respond to concerns raised in recent consultations that HMRC’s existing powers have been under-utilised and lack sufficient deterrent effect.

The ATT supports robust action against tax advisers who deliberately undermine the tax system. However, we are concerned that the breadth of the new provisions may unintentionally capture advisers acting reasonably and in good faith, particularly in complex or uncertain areas of tax law. The absence of an explicit intent or reasonable care safeguard, combined with potentially uncapped financial penalties and the replacement of HMRC’s discretion to publish sanctions with a statutory duty to do so, risks disproportionate outcomes and a chilling effect on the tax advice market.

The proposals expand the scope of the regime from ‘tax agents’ to the broader category of ‘tax advisers’, lower the threshold for intervention from ‘deliberate misconduct’ to the wider concept of ‘sanctionable conduct’, and introduce a materially enhanced penalty framework based on ‘potential lost revenue’. At the same time, they remove HMRC’s ability to withhold publication in cases where it would be disproportionate or raise safeguarding concerns, representing a fundamental shift in both the reach and severity of the regime.

Targeted amendments and safeguards are therefore recommended to ensure the regime remains focused on deliberate or reckless behaviour, maintains proportionality, and provides appropriate procedural protections, including discretion around publication. These changes would help preserve confidence in the tax advice market while supporting HMRC’s objective of tackling persistent and abusive facilitation of non-compliance by tax advisers.