Sanctionable Conduct for Tax Advisers

As of April 2026, HMRC have new powers to tackle Tax Advisers failing in their duties. The threshold for arguing misconduct is lower, yet penalties for failures are higher. HMRC can access tax advisers’ information, and publicly name and shame them.

What is new for Tax Advisers?

HMRC has scrapped its Dishonest Conduct regime, and replaced it with the new Sanctionable Conduct regime for tax advisers, from April 2026. HMRC say they are only targeting tax advisers who intentionally facilitate tax losses, but there is some concern that responsible tax advisers who just make mistakes could also be caught. These measured were introduced by Sections 250-253 and Schedule 22 to the Finance Act 2026.

Under the new regime the scope of advisers who may be caught has become wider. Add to that the lower threshold/trigger for HMRC to sanction advisers, and higher penalties too. Advisers should be worried, because their work will face greater scrutiny as a result of File Access Notices, and they could be publicly named and shamed (like their clients can already).

Advisers should review internal controls, ensure that advice is well-documented and defensible, and maintain clear, evidence-based reasoning for positions taken. Strong governance, training and risk management are critical to mitigating exposure under the new regime.

From 1 April 2026, HMRC has enhanced enforcement powers designed to target advisers who intentionally facilitate tax losses.

Older Dishonest Conduct regime

Schedule 38 to Finance Act 2012 was introduced to tackle dishonest agents, but as per my older articles based of Freedom of Information requests made to HMRC, the dishonest conduct powers had hardly been used at all. It follows that most tax advisers are unlikely to have corresponded with HMRC about those in practice.

Sanctionable Conduct overview 

While HMRC generally regard tax advisers as upstanding professionals, they wanted to tackle the minority who intentionally facilitated tax losses. The policy objective behind the new regime was to increase trust in tax advisers and the tax system as a whole. Their new powers include:

• re-defining ‘sanctionable conduct’ and the trigger for this
• HMRC obtaining the tax advice given to clients
• HMRC penalising sanctionable conduct through financial penalties, and
• by publishing details of the sanctioned tax adviser’s misconduct online.

Who is a Tax Adviser for Sanctionable Conduct purposes?

The FA 2026 legislation defines a “tax adviser” as ‘any individual or organisation, acting in the course of business, who assists others with their tax affairs.’ Interestingly, the rules also apply to indirect advisers and former advisers.

According to published HMRC guidance in the Compliance Handbook, the ‘tax adviser’ definition extends to:

• sole practitioners, partnerships and companies (previous regime did not apply to organisations)
• partners or employees of an accounting practice
• bank employees, where that person provides tax advice
• solicitors or barristers advising on tax matters
• valuers providing valuations for tax purposes
• partners or employees of a ‘repayment agent’
• business advisers providing tax advice

There is no doubt as to the wider scope of the advisers falling within the definition of tax advisers, and therefore susceptible to the new Sanctionable Conduct regime. That said, there are some exclusions, for example: individuals providing free advice like at the Citizens Advice Bureau and those giving informal tax advice to their family.

What is ‘Sanctionable Conduct’ as per Finance Act 2026?

‘Sanctionable conduct’ is defined as ‘any act or omission by a tax adviser, in the course of acting as a tax adviser, undertaken with the intention of causing a loss of tax revenue.’

There are two statutory tests to establish sanctionable conduct:

1. Was the sanctionable conduct carried out in the course of acting as a tax adviser?
2. Was it done with the intention of bringing about a loss of tax revenue?

Examples of sanctionable conduct include: advising a client to claim a tax relief which they are not entitled to, falsifying information provided, or hiding tax/legal risks. Understandably, the burden of proof remains on HMRC, to demonstrate a tax adviser’s sanctionable conduct, on the usual balance of probabilities. In practice, HMRC is expected to gather information during compliance checks, investigations and visits to premises, as well as using the new File Access Notices.

Sanctionable Conduct Notices

A sanctionable conduct notice may be issued where HMRC determines, on the balance of probabilities, that the tax adviser was engaging in sanctionable conduct. The notice must set out the grounds for that determination and be approved by an authorised officer at HMRC. This effectively gives the tax adviser a final opportunity to respond before penalties are imposed.

Penalties for sanctionable conduct

Where potential lost revenue is attributable to the tax adviser’s sanctionable conduct, the penalty is calculated as a percentage. This starts at 70% of the potential lost revenue, which can be reduced to 20% or 35% where there has been a voluntary or prompted disclosure. Importantly, the penalties increase significantly for repeat behaviour/penalties.

Where the potential lost revenue cannot be determined or is nil, the minimum penalty of £7,500 applies, and HMRC will not publish the tax adviser’s details. Like many other HMRC decisions, like on taxes and penalties, these penalties may be appealed to HMRC and the tribunal.

File Access Notices

There are two situations in which HMRC can issue a ‘file access notice’:

1. There are reasonable grounds to suspect that a tax adviser is engaging, or has engaged, in sanctionable conduct.
2. A tax adviser has been convicted of a tax-related fraud or dishonesty offence.

Interestingly, file access notices can be used to access a tax adviser’s working papers and other documents used in advising their clients where they existed even before 1 April 2026. However, such documents cannot be used to determine the new sanctionable conduct penalty.

HMRC do not require a tribunal judge’s approval to issue a file access notice to a tax adviser, but the tax adviser or third-party recipient may appeal against the notice or any contents. However, like in the case of formal first-party Information Notices, where HMRC obtains a tribunal judge’s approval, then there is no right of appeal. There are similar mechanics here to those in Schedule 36 to Finance Act 2008.

What stands out though is that under the sanctionable conduct regime, HMRC can require access to a tax adviser’s ‘working papers’ and any documents received, created or used in the course of advising clients with their tax affairs. This is a much wider information gathering power than Sch 36 FA 2008.

Financial penalties for inaccurate documents and non-compliance

The provision of inaccurate documents may lead to penalties of up to £3,000, per inaccuracy, where the behaviour is deliberate or arises from a failure to take reasonable care. Please note that it is also a criminal offence to destroy, conceal or dispose of a document required under a file access notice. This means that recipients could be prosecuted too.

Failure to comply with the file access notice may result in an initial penalty of £300, unless the recipient had a reasonable excuse and met their obligation thereafter without an unreasonable delay. Continued failure to comply can lead to daily penalties of up to £60 a day, and for longer delays HMRC may apply to the tribunal to increase the daily penalty up to a maximum of £1,000 per day.

Publishing details about a tax adviser’s sanctionable conduct

HMRC must publish details of tax advisers who incur penalties for sanctionable conduct (exceeding the £7,500 minimum).

Published information may include:

• the adviser’s name, trading names
• the business in which the adviser is employed, but only if their identity is unclear
• the postcode of any address used
• other identifying information
• details of the penalty and the reasons for it

Importantly, there is no right of appeal against publication online. However, like for Publishing Details of Deliberate Defaulters, the tax adviser concerned may make representations to HMRC.