HMRC: Judge, jury and executioner?

Draft legislation in Finance Bill 2026 includes requirements for tax advisers to register with HMRC. Without registering the legislation states they would be unable to interact with HMRC on behalf of their clients. According to the draft legislation, a person is a tax adviser if they

“(a) advise …[an]other person in relation to tax;

(b) act…as an agent on behalf of another person in relation to tax;

(c) provide assistance with any document that is likely to be relied on by HMRC to determine the other person’s tax position.”

Already, professional bodies are up in arms about this. PensionProfessionals.com says “Pensions professionals [are] inadvertently caught up in HMRC push for tax adviser registration” and the Law Society says “Tax adviser legislation will place ‘undue burden’ on legal professionals”. HMRC has been urged to exclude these professionals from the registration requirement. Meanwhile, the CIOT and ICAEW have published their responses to the draft legislation, highlighting that the legislation as it stands is not fit for purpose.

The reason for additional regulation of tax advisers is to improve standards in the tax advisory market. However, it is unclear to me as a tax disputes specialist how regulation by a Tax Authority can be anything but a conflict of interest. In particular:

– the legislation gives HMRC the power to suspend or withdraw registration;

– there would be penalties for not registering with HMRC (thereby controlling access to the tax advisory market);

– making eligibility for registration subject to a number of conditions including up to date tax affairs. Although this might reflect poorly on an individual, it is more likely to reflect on the adviser’s organisational skills in their personal affairs than their ability to advise clients.

Allowing HMRC to determine who can represent a client is a clear conflict of interest. What gives HMRC the right to do this? And when trust in HMRC is so low, how does HMRC’s effective regulation of the tax profession improve trust in the tax advisory market?

Controlling access to the tax advisory market is a regulatory power.

In terms of increasing the quality of tax advice, there is nothing in the legislation that links registration with HMRC to how ‘good’ a tax adviser is. Indeed, HMRC’s definition of a ‘good’ adviser might be one who (e.g.) provides the department with all information requested, whereas a ‘bad’ one might review the requirements and consider whether the request is reasonable and relevant to their client’s tax position, and then decline to provide anything they believe does not meet the criteria.

Anyone, including HMRC, can check whether a person is regulated. HMRC can automatically add regulated individuals to a list if they wish. Furthermore, HMRC already require authorisation forms before speaking to a person about a client’s tax affairs. Is it not up to the taxpayer to decide who they want to be represented by?

HMRC’s charter states:

“We’ll respect your wish to have someone else deal with us on your behalf, such as an accountant, friend or a relative. We’ll only deal with them if you have authorised them to represent you. To protect you, HMRC works with professional bodies to set the standard expected of professional agents who support you to meet your tax obligations. We can refuse to work with professional agents who fail to adhere to this standard.”

If HMRC can already refuse to deal with agents, what is the point of this additional compliance burden?

1) It would be easier for HMRC to have a blacklist of agents they refuse to work with and they can publicise this list. HMRC can refuse to work with individuals on this list.

2) HMRC has often stated that there are ‘rogue’ advisers who give poor advice, file incorrect claims (for example) or promote aggressive tax avoidance arrangements. The department has consistently asserted that these rogue advisers tend to be unregulated. Again, it is unclear how this proposed legislation addresses the points HMRC has raised regarding rogue advisers given that the Charter allows an individual to be represented by anyone. Rogue advisers are likely to continue without registering with HMRC and can ‘interact’ with HMRC as a ‘friend’ of the taxpayer. Unless HMRC will refuse to liaise with anyone who is not registered with HMRC. But then if someone is calling to assist an elderly relative, will they need to register in advance of making the phone call? If they do, then how long will the registration take?

And what about lay-executors? They act on behalf of estates and file IHT returns. Are they tax advisers for these purposes?

Timelines

The draft legislation proposes that the registration requirement will become mandatory from 1 April 2026. By that time, HMRC will have to design and publicise the registration form and ensure the website (assuming it is an electronic form) does not crash when everyone registers.

It is unclear whether HMRC has the resources to review the applications – per the draft legislation, “an officer of Revenue and Customs must – (a) decide whether to approve the application, and (b) notify the adviser of the decision”. This seems extremely labour intensive and overoptimistic given that HMRC is still catching up with post from last year.

There are no timelines for the review and it is unclear whether an adviser can continue to represent clients whilst the application is being reviewed. We assume yes as otherwise the system would grind to a halt.

Further, it is unclear who at HMRC will be responsible for monitoring the registrations on an ongoing basis.

Withdrawal of registration

The theory is that HMRC will monitor tax advisers and withdraw or suspend registration where they consider the eligibility criteria are not met, for example, that the adviser does not meet “standards expected of tax advisers in their dealings with HMRC”. I know many other professionals and taxpayers who wish that this worked both ways.

If registration is suspended or withdrawn, the adviser may appeal, however it is unclear whether the adviser would continue to “interact” with HMRC while an appeal was ongoing.

What happens to clients of small businesses if the adviser is unable to continue to interact with HMRC while an appeal is ongoing? What happens to missed deadlines, interest and penalties? Clients should not be held responsible, and it is unlikely PII will cover this.

Tax disputes

For Tax Investigations specialists, this type of legislation raises concerns as most of our interactions with HMRC are on the basis of an alternative perspective to HMRC and the vast majority of our work consists of interactions with HMRC. If there is an impasse, would an officer of HMRC attempt to suspend registration on the basis of eligibility condition B (“not subject to a decision by HMRC to refuse to deal with them”).

I often work with professionals (accountants, tax advisers, insolvency practitioners) where concerns are raised that if they do not give HMRC what they want, the department may refuse to work with them in future. This is a current situation without any requirement for registration and I have seen the approach backfire badly on clients.

On the other hand, when a person represents taxpayers against HMRC, would registration with HMRC reduce client’s faith in that adviser as truly independent of HMRC? Most advisers would prefer to be as separate as possible from the tax authority in relation to which they practice to demonstrate that the advice given is truly objective, based on legislation and not dependant on HMRC’s ‘guidance’.

And finally…

If anyone wanted to get around the registration requirement, it would be fairly straightforward. The adviser could prepare all documentation, tax returns, emails, claims etc and have a third party or the taxpayer themselves send it to HMRC. Providing the person does not wish to ‘interact’ with HMRC directly, there is no need to register.

The legislation is poorly thought out and unnecessary. It raises conflicts of interest, demands further resources from HMRC and does not improve standards in the tax advisory market.

If HMRC really wants to improve standards in the tax advisory market, the department needs to use existing powers against promoters – including criminal prosecution where there is evidence of fraud, stop notices to prevent them practising and financial penalties – and make better use of its powers against dishonest tax advisers.

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