By Isabella Colletta
The Chartered Institute of Taxation (CIOT) has welcomed a UK government proposal for greater regulation on commercial tax advisors, but warns this should be brought in with caution. The proposal suggests that all commercial tax advisers should belong to a recognised professional body.
The government has also suggested that if introduced, this policy could introduce criteria by which professional bodies would be recognised, to ensure high tax advisory standards. This is one of the options HMRC are considering after the government announced in March that it would be launching a consultation into improving standards within the tax advice market.
Under this proposal, advisers registered could be regularly reviewed around their continuing fitness and propriety for practicing commercial advice, with possible penalties if standards are not met. However, CIOT have warned that a government regulator could pose issues.
CIOT tax policy director John Cullinane said: “A Government regulator risks being costly and ineffective. There will be registration and supervision costs alongside professional body membership, costs which will likely be passed on to the customer. The standards that would be imposed are in general lower than those already required of professional body membership.
“In short it will ignore what has been achieved in recent years by professional bodies working together and with HMRC to raise standards – and in some respects might serve to undermine it because those interested in cutting corners will be able to buy a veneer of respectability through registration without conforming to higher professional standards.”
While CIOT have expressed support for a policy requiring tax advisors to be professionally qualified, Cullinane recommended that advisors be given time to prepare before regulations are introduced. He said: “There is the risk of excessive disruption to the tax system if agents and advisers who are not members of a recognised professional body are outlawed overnight. We suggest a transitional period – which might involve a possibly escalating level of requirements common to professional body members being applied to this population – to allow existing unaffiliated agents to adapt.”