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AIA RESPONDS TO CONSULTATION ON RAISING STANDARDS IN THE TAX MARKET

Last updated: 15 Jun 2021 12:23 Posted in: AIA

Raising standards in the tax advice market

AIA welcomes this opportunity to respond to the ‘Raising standards in the tax advice market: professional indemnity insurance and defining tax advice’ published by HMRC on 23 March 2021. 

The AIA’s response provides further clarity and guidance on how AIA works to uphold standards of tax advice issued by its members in practice. 

Although AIA welcomes measures to raise standards in the tax advice market, broadly supporting the benefits of requiring tax agents to hold professional indemnity insurance, there still requires greater understanding of the role professional bodies play in regulating membership beyond requiring members hold PII. There is little evidence to see how simply imposing a PII requirement would allow for significant protection for consumers as the competence and quality assurance of tax agents who are not members of a professional body remains untested. Simply imposing a PII requirement does little structurally to raise standards and mitigate serious risks posed by unregulated agents.

Legal protection for the term 'accountant'

There should also be further consideration given to introducing legal protection for professional titles, such as ‘tax agent’ and ‘accountant’, within any strategy for encouraging good tax agents.

Good agents help to improve tax compliance by providing quality advice on tax law and ensuring that clients can only claim their appropriate reliefs and consequently pay the correct tax. Good tax agents help to protect the public interest by reducing resourcing costs for HMRC, allowing for an efficient and targeted taxation system.

Protecting the public interest

There is a wider public interest argument in place for expansion of the role of professional bodies within the remit of improving ‘good agents’ and how they can add value. The government should work to promote the effectiveness of good agents by recognising that additional safeguards and public interest concerns are met by consumers undertaking the services of a regulated individual to conduct their tax affairs, with proper recourse to advice if things go wrong and an independent complaints system.

AIA Director of Operations, David Potts said: “It is clear that the simplest and most robust way of protecting the public interest is to ensure that any individual providing tax advice as a service is a member of a recognised professional body. All options set out within the consultation require careful consideration against the public interest – ensuring a continuation of the availability of tax advice to members of the public whilst recognising the benefits of greater scrutiny over the competence of tax agents to bear down on bad behaviour and agents.

It must be recognised that any option that increases the burden and cost of regulation may result in tax agents leaving the regulated sector and acting with a lower level of scrutiny which would not result in a net benefit position.

Read the consultation response
It is clear that the simplest and most robust way of protecting the public interest is to ensure that any individual providing tax advice as a service is a member of a recognised professional body. All options set out within the consultation require careful consideration against the public interest – ensuring a continuation of the availability of tax advice to members of the public whilst recognising the benefits of greater scrutiny over the competence of tax agents to bear down on bad behaviour and agents