At the Spring Budget 2024, the government published a consultation on raising standards in the tax advice market. The consultation sets out three possible options for a strengthened regulatory framework. It also proposes that tax advisers will be required to register with HMRC.  

Option one is mandatory membership of a recognised professional body. Professional bodies would monitor and enforce standards and raise those standards where necessary.  

This would be achieved through recognition of professional bodies to act as a supervisor. Professional bodies would set acceptable minimum professional standards for their members, with adequate processes to monitor and enforce adherence with those standards. This could be assessed by a government body or an otherwise agreed supervisory body. 

Option two is a joint HMRC-industry enforcement to monitor and raise market standards. Under this so-called hybrid approach, tax practitioners in scope of the regulatory framework would be required to either become and remain a member of a recognised professional body, or be supervised by HMRC. HMRC would take a greater role in maintaining and raising standards of unaffiliated tax practitioners.   

Option three is regulation by a government body that sets, monitors, enforces and raises standards in the market. This approach would see the introduction of a new independent regulator – or an expanded remit of an existing regulator – to regulate all tax practitioners.  

A single independent regulator would provide consistency across the market. Having an independent body would avoid potential conflicts of interest arising from HMRC acting as a regulator (as in Option two). It would also avoid a potential race to the bottom, which could occur under the first two options. 

Additionally, the government is proposing to mandate registration for tax practitioners who wish to interact with HMRC. HMRC will introduce a streamlined, automated process for registration to reduce the administrative burden on tax practitioners. It will also introduce a single agent registration service allowing tax practitioners to register for all relevant services.   

The proposals in the consultation could have profound consequences for the tax services market, both for advisers and, potentially, any professional body and its members. The closing date for comments is 29 May 2024. We would welcome your thoughts and comments by 2 May. Please send them to Frank Haskew.   

It is possible to respond directly to the government by completing an online survey or by email to raisingstandardsconsultation@hmrc.gov.uk.