As part of HMRC’s ongoing work to raise standards in the tax advice market, the tax department has
updated its required standard for accountants and agents. This includes a long overdue endorsement of
the Professional Conduct in Relation to Taxation (PCRT) code, which is co-authored by seven of the
leading accountancy/tax professional bodies.
In the Spring Budget the government kick-started plans to tackle the issue of non-qualified individuals acting as tax
agents for taxpayers. HMRC clearly consider many of these agents are acting unprofessionally and have therefore
launched a consultation on raising standards in the tax advice market.
The consultation focuses on strengthening the regulatory framework for agents, and have set out three main areas
that they want to look into further:
- Mandatory membership of a recognised professional body
- Joint HMRC–industry enforcement; and
- Regulation by a separate statutory government body
As you can imagine, the consultation is controversial for some, with opinions strongly held on both sides of the
debate, but the recent update to HMRC’s standard for accountants and agents could be a hint at the direction of
travel, with the department appearing to lean towards membership of a professional body as the current front-
runner. However, as the consultation only finished two days ago, nothing is yet set in stone.
Aligning standards
It might surprise you to know that, contrary to popular belief, membership of a professional body is not
mandatory for agents providing tax advice and services, nor is it necessary to have a recognised
professional qualification. However, with the vast majority of agents already members of professional
bodies, HMRC is keen to work collaboratively with the bodies to ensure consistent standards are upheld
across the board.
The PCRT sets out the principles and standards of behaviour that members, affiliates and students of the
PCRT bodies must follow in their tax work. The latest version of the HMRC standard for agents (‘the
standard’) published on 17th May recognises and endorses the PCRT code confirming that “If agents meet
their professional body’s code of ethics, HMRC should not place further requirements on them.”
In the past, HMRC’s own list of principles did not always quite align with those set by the individual
professional bodies. By clarifying that the HMRC standard does not override the ethical codes of the
various bodies, any potential conflict or misalignment is eliminated. For agents who are members of a
professional body, the admin burden of having to adhere to two separate codes of conduct is eliminated.
Basic principles
HMRC’s required standard focuses on three fundamental principles found in the PCRT code, Namely:
- Integrity
- Professional competence and due care; and
- Professional behaviour
There is also a section in the standard specifically relating to tax planning, including the requirement that
agents must act lawfully, be transparent and exercise professional judgement when advising clients on tax
planning arrangements.
Professional bodies welcome HMRC’s new attitude
In a joint statement, the accountancy bodies that wrote the PCRT, said: “We welcome the renewed recognition of PCRT as the gold standard through its inclusion in the revised HMRC standard. There is currently considerable focus on potential future regulation of the tax services market with an ongoing government consultation. The PCRT bodies are keen that any future direction raises standards consistently across the whole market to the high levels required by PCRT. The revised standard is reassuring in its endorsement of PCRT as setting and meeting the desired high standards of tax agents, as well as ensuring that those meeting it are not having to consider multiple, overlapping codes of ethics.”
Agents who aren’t qualified accountants
At last, the penny has dropped with HMRC, who have belatedly realised that many of the problems that they’re seeking to address, have been caused by agents who are essentially bookkeepers with some tax knowledge. Unfortunately, these individuals, often well-meaning and fundamentally honest individuals, do not hold a professionally qualification, do not hold indemnity insurance to cover mistakes and are far to often, not up to date with changes in tax law and its operation.
HMRC now has a range of powers to deal with agents who it considers are not upholding the standards, including:
- Blocking access to HMRC’s agent services
- The issue of dishonest tax agent conduct notices, with penalties and publication of names
- Criminal investigation if an offence is suspected
- Refusing to deal with an agent altogether.
Accountant’s view
In my opinion, which anecdotally is shared with virtually all qualified accountants, the sooner we see the back of unqualified ‘agents’ the better. Accountants are subject to professional degree exams, on-going competency learning, professional indemnity insurance and various other costs and requirements.Most ‘agents’ are not subject to any of the additional costs and competency requirements that we are. Whilst I accept that many of them are honest and achieve a basic proficiency, many more do not. This is why I fully endorse the new PCRT code and hope that now that the consultation period is over that HMRC officially incorporates it into their ‘standard’ for the future.
