The Chancellor’s budget was mostly a damp squib for our sector, with many of his announcements leaked in advance. However, there was one point of interest – the government’s plan to crack down on dodgy tax advisors.
Why is that relevant to us?
You may be aware of tax avoidance schemes peddled by convincing ‘tax advisors’, but did you know that anyone can legitimately call themselves a tax advisor? The sector is unregulated meaning that individuals can set up and operate without being required to adhere to any minimum standards or guidelines.
Whilst there are several different professional bodies that advisors can join, doing so is not mandatory. This means that the general public is susceptible to rogue ‘advisors’ who might not have your best interests in mind when giving an opinion.
What is the Government doing about it?
There are 3 options on the table:
- Mandatory membership of a recognised professional body;
- Joint HMRC/industry enforcement;
- Regulation by a separate independent entity.
The government prefers option 1. Alongside this, the government would need to actively oversee the professional bodies to ensure that they set and enforce suitable standards.
It won’t be foolproof
Whilst mandatory membership of a recognised body would certainly be welcome, it won’t be foolproof as it won’t guarantee all tax advice is correct. We are aware of instances where members of one of the tax bodies has given incorrect advice resulting in contractors receiving a large future tax bill. In at least one incident the contractor has complained to the advisor’s professional body, but no redress action has been taken.
And it won’t be quick either!
Whatever the government decides to do, it won’t be a quick fix. The consultation needs to run, decisions made, and then legislation drawn up, agreed and implemented. It will take a few years at the very least, and with a general election on the horizon any new government could decide to change direction entirely.
