Tax advisers welcome modest steps towards better standards

The Chartered Institute of Taxation (CIOT) has welcomed today’s announcement by the government of the next steps in its efforts to raise standards in the tax advice market and to tackle promoters of tax avoidance.

In its Summary of Responses and Next Steps from the call for evidence on raising standards in the market for tax advice, the government states that it will consult on requiring tax advisers to hold professional indemnity insurance and on how to define tax advice.

John Cullinane, CIOT Director of Public Policy, commented:

“The government seem to have decided to stop short, for the time being at least, of our preferred approach of requiring all tax advisers to be professionally qualified. But we are encouraged that they are still looking in earnest at how to raise standards in the profession, especially among the 30 per cent of advisers who are not members of a professional body.

“We particularly welcome the proposal that all tax advisers should have professional indemnity insurance – as professional body members already do. This would provide a very basic level of protection for the customer.

“We also welcome the announcement that HMRC will review their powers to enforce their Standards for Agents. Although this is less comprehensive than Professional Conduct in Relation to Taxation (‘PCRT’), to which our members and most tax professionals adhere, enforcement would in itself be a step forward. The government’s commitment to continue to work alongside professional bodies in this area is also welcome.”

The government has also announced that it will consult in the new year on further measures to tackle promoters of tax avoidance schemes.

John Cullinane commented:

“There is no place in the tax profession for those who devise, promote or sell tax avoidance schemes. CIOT and the other professional bodies tightened up our Professional Conduct in Relation to Taxation rules in 2017 to make this explicit.

“We are therefore supportive of the government proposals outlined in today’s statement by the Financial Secretary aimed at shutting down the remaining scheme promoters.

“Promotion of aggressive avoidance is now pretty much entirely from outside the tax profession and to some extent from outside any group that one would reasonably call ‘advisers’. It is therefore helpful to see the government distinguishing in this statement between ‘promoters’ and ‘advisers’. Indeed it would be helpful if this distinction could be reflected by taking mainstream advice back out of other legislation where the two get unfairly and improperly lumped together.  The aim should, rightly, be to stamp out the activities of those who push tax schemes while at the same time not making life harder for the compliant majority of advisers who play a vital role in the proper administration of the tax system.

Notes for editors

1. The Government has published a Summary of Responses and Next Steps from the call for evidence on raising standards in the market for tax advice. As a first step towards raising standards, the Government will consult on requiring tax advisers to hold professional indemnity insurance and how to define tax advice.

2. The four proposals to tackle promotion of avoidance on which the government plan to consult in the new year are:

Disrupt the business model of offshore promoters by making it harder for such promoters to access the UK by making their onshore partners equally responsible for the anti-avoidance regime penalties that the offshore promoter generates.
Directly tackle the secrecy on which promoters rely; the proposals here would ensure that taxpayers are fully informed of the reality of what is being sold to them.
Disrupt the economics of tax avoidance by ensuring that, without delay, promoters face financial consequences for continuing to promote tax avoidance so that promoters cannot continue to profit from avoidance while HMRC investigates them.
Give HMRC additional powers to act against companies that continue to promote schemes and who sidestep the rules designed to restrict their activities. The proposals would see such promoters shut down and restricted from setting up similar businesses.

3. The Chartered Institute of Taxation

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.