PublicEye
ANALYSIS
HMRC: now is the time to make tax advice accountable
UK accountancy industry has a once-in-a-generation opportunity to reform the tax advice market, which is currently fraught with inconsistency and unnecessary risk for consumers, says Adam Harper
The long-awaited HMRC consultation on Raising Standards in the Tax Advice Market recently concluded. It now falls to the powers-that-be at HMRC to weigh up the feedback it has received reflecting on the pros and cons of three possible government plans for fixing this broken market.
As the director of policy for AAT, I have led our campaign on the tax advice market for more than 14 years, representing a membership of more than 50,000 accountancy and finance professionals and the wider public benefit dynamic on this issue.
During this time, we’ve built a deep understanding of the challenges and opportunities facing the sector, and we have long been certain that the most effective way of raising standards without the taxpayer footing a huge bill is to introduce mandatory membership of recognised professional bodies.
The problem: limited safeguards
Thousands of consumers and businesses are being harmed by poor-quality tax advice coming from unaffiliated tax practitioners. Approximately one-third of people who call themselves accountants and tax advisers are not members of a professional body. This is a problem because they are not subject to regulatory oversight, have no requirement to adhere to professional standards of conduct or ethics, and there are limited safeguards in place for their clients when things go wrong.
There is also a general lack of awareness and understanding from consumers that the market is unregulated. Many taxpayers suffer from the misconception that all tax practitioners will be suitably qualified, so consumers don’t think to ask the right questions at the point of engagement.
This minority of unregulated accountants, tax advisers and tax rebate firms are free to practise despite what HMRC has described as varieties of incompetent, unprofessional and unscrupulous behaviour. The harms they cause clients and to our public finances are only matched by the damage inflicted to the reputation of the wider accountancy profession.
The solution: mandatory standards
The best way to protect consumers and uphold the reputation of the accountancy and tax profession is by making membership of professional bodies such as AAT mandatory for all tax practitioners. This solution also avoids an incoming government having to set up a body to set, monitor, enforce and raise standards in the tax advisory market.
It also has the advantage of being reliant on an existing model. Professional bodies already provide oversight controls for their existing members, and many are set up to regulate and supervise their members for anti-money laundering purposes.
There would be a period of time required for the bodies to set up mechanisms to onboard those tax advisers who are currently unregulated, and for those tax agents to demonstrate they have attained the necessary standards of professionalism the costs would be borne by the professional bodies without the need for public investment.
As well as reducing harm to small businesses, this solution will help to close the tax gap and alleviate the cost burden on HMRC to improve tax compliance.
It will also introduce serious consequences for malpractice, which will be a more robust solution than the current sanctions available.
In our view, it’s about education just as much as it is about regulation. By bringing unaffiliated practitioners into the fold through mandatory professional membership, we can ensure every tax adviser has the right knowledge, support and oversight needed to lift their game.
Modern professional bodies provide a wide array of opportunities to upskill, working alongside members to spot when and how they might need to update their practice.
On the back of that activity it will be essential to educate taxpayers that steps are being put in place to ensure that anyone they obtain tax advice from will now have to be suitably qualified.
It’s time for a level playing field that protects consumers and upholds our collective reputation.
With an incoming government and the right call from HMRC, we finally have a crucial opportunity to make all tax advisers accountable.
“There’s also a general lack of awareness and understanding from consumers that the market is unregulated.”
Accounting technicians gaining international recognition
Malaysian accounting body puts accounting technicians at the heart of a national push to grow profession
Malaysian accounting institute’s boost for accounting technicians
The value of accounting technicians is increasingly gaining recognition around the world, with the Malaysian Institute of Accountants (MIA) acknowledging the important role they could play in the development of the profession there.
In an article jointly authored by Tim Dawkins and the MIA in AAT News, the institute explained that to address the challenges of training more accountants, it has established “recognised standards for accounting technicians based on the foundation proficiency level in line with the International Federation of Accountants (IFAC) International Education Standards”.
Malaysia had aimed to produce 60,000 accountants by 2020, which was subsequently revised to 2030. To date, there are close to 40,000 members registered with the MIA.
“Qualified accounting technicians are well placed to be able to fill the shortfall in accountancy professionals. Their training gives them the skills to be able to support businesses of all sizes to not only survive but thrive in a rapidly changing global business environment,” the authors wrote.
Digital-first is central to ensuring relevance
A digital-first approach is vital to both AAT and the accounting profession’s future relevance. That was the message from CEO Sarah Beale at the Digital Excellence conference in May.
In her speech, Beale highlighted that the approach specifically aligns with the AAT’s strategic plan of keeping the accounting profession relevant by “driving up standards and building responsible business”.
“There is understandably some apprehension regarding digitalisation and especially AI technology, but these events present a platform to reinforce the message that actually developing technologies can bring about new innovations and opportunities,” she said.
Sarah Beale has made digital first a priority for AAT
