The Law Society has warned that new tax adviser legislation from HM Revenue & Customs risks placing an undue burden on professionals without helping taxpayers.
Chancery Lane was responding to a policy paper and draft legislation released by HMRC entitled ‘Modernising and mandating tax adviser registration with HMRC’.
The measure introduces a legal requirement for tax advisers who interact with HMRC on behalf of clients to register with the agency and meet minimum standards. This will begin from 1 April next year, with a transitional period of at least 3 months. It comes as part of HMRC’s plan to raise standards in the tax advice market and protect taxpayers from tax advisers who are unable to meet eligibility conditions and minimum standards.
Law Society president Richard Atkinson said: ‘As currently framed, the draft legislation is cast too widely and risks imposing significant new burdens and uncertainty on advisers. That is particularly true for sole practitioners and small firms. Most importantly, it also does not deliver better outcomes for taxpayers. The proposed definitions of “tax adviser” and “interaction with HMRC” are so broad that many legal professionals who neither advertise themselves as tax specialists nor act as tax advisers in any meaningful sense, could be at risk of falling short of the minimum standards. This makes the proposals unfair and unwieldy.
‘For example, even conveyancers filling out Stamp Duty Land Tax returns could be affected. This risks complicating and lengthening the conveyancing process. The legislation should be targeted only at agents who present the greatest compliance risk.’
The Law Society recommends that the regime should be limited only to those who routinely act as agents in relation to a client’s tax affairs, or who hold themselves out as tax advisers. It also called for greater clarity on the differences between firm-level and individual registration requirements; for further consideration to be given to the territorial scope of the measures; for the conditions for registration to be revised to better reflect the reasonable expectations of a tax adviser; and the exclusion of professionals already subject to other regulatory regimes to avoid duplication.
Former Clifford Chance partner Dan Neidle, of Tax Policy Associates, told the Gazette: ‘I am concerned [the legislation] puts too many burdens on small advisers without doing anything about the really bad actors.’
Neidle pointed out that people who sell misleading tax avoidance schemes often do not submit the tax return themselves on behalf of clients, and so would not need to become registered with HMRC. ’After this change they would definitely not do it themselves’, he added.
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