Responding to the government’s consultation on raising standards in the tax advice market which closed on 29 May 2024, ICAEW said that the chosen approach must raise technical and ethical standards among tax practitioners and protect consumers from incompetent or unscrupulous practitioners, without increasing costs to the extent that taxpayers cannot afford professional advice.
Out of the three options presented within the consultation, our response, which was developed jointly by the Professional Standards Department and the ICAEW Tax Faculty, stated that the preferred option was the mandatory membership of a professional body, but only if it is appropriately designed and scoped.
The three options for tax regulation
- Option one was mandatory membership of a recognised professional body. Professional bodies would be required to monitor and enforce standards, and raise those standards where necessary.
- Under option two, tax practitioners would be required to be 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.
Our response emphasised that ICAEW’s current entry requirements would not change, so in practice, it would be unlikely that many of the current unaffiliated tax practitioners would seek to join the Institute. Additionally, we noted that changes to the regulatory framework should extend to all tax practitioners and not just to agents who interact with HMRC systems.
An increase in monitoring requirements, or the creation of new oversight bodies, could risk significant costs being pushed down to taxpayers. Tax advice and services could then become unaffordable for the majority of taxpayers.
Alan Vallance, ICAEW Chief Executive, said:
“It is paramount that any change made to the regulation of people and firms in the tax advice market must be made in the public interest.
“While we think there are issues with all of the proposed options, if HMRC does decide to introduce tax regulation, our preference is for mandatory membership of a professional body but only if the model is appropriately designed and scoped. If not, there is a risk that costs could be pushed down to consumers, making tax advice and services unaffordable and therefore undermining the objective of regulation.”
Sophie Wales, ICAEW Director Regulatory Policy, added:
“As we detailed in our response, for a regulatory regime to be effective, there should be a level playing field for all people and firms providing tax advice and services, which includes those already subject to statutory regulation, such as solicitors.
“Of course, ICAEW supports the government’s intention to raise standards in the tax advice market from both a technical and ethical perspective. However, it is important that any changes do not create more problems than they solve, nor do they put professional advice out of the reach of taxpayers.”
In its article on the publication of the consultation document, the ICAEW Tax Faculty provided more information on each of the three options.