So the ICAEW has called on the government to reconsider its plans, which would introduce a legal requirement for tax advisers to register with HMRC, and introduce significant new penalties for advisers based on their clients’ underpaid taxes.

Penalties could be issued for any tax return where HMRC considers more tax is due, even if the tax adviser has not acted improperly. Draft legislation for the Finance Bill 2025/26 also proposes the introduction of a strict liability criminal offence for failure to disclose a tax avoidance scheme, and even partners is limited liability partnerships could be caught if they do not file their tax return on time.

One of the biggest problems for the various professional bodies representing tax advisers, accountants, lawyers and conveyancing solicitors, is the ‘catch-all’ nature of the proposals and use of the very vague ‘interaction with HMRC’ criteria as the government’s definition of who is affected. The use of the word ‘interaction’ is also widely questioned.

ICAEW said that as drafted, the legislation misses the target. On mandatory registration for all tax practitioners who interact with HMRC, ICAEW said ‘the plans amounted to quasi regulation, as the eligibility criteria would allow for monitoring against a prescribed standard. It could also ban a firm from providing tax advice if just one of its partners was late in filing their own personal tax return’.

ICAEW called for mandatory registration to be deferred until April 2027 allowing time for more consultation, adding it was ‘supportive of policies that aim to raise standards in the tax market and drive out the bad actors who cause considerable harm to the tax system. However, these proposals don’t achieve those objectives and would not improve standards in the tax market’.

Alan Vallance, ICAEW chief executive (pictured), said:

‘These proposals will simply add costs and burdens to businesses, some of whom may find they can no longer access the tax advice they need.

‘Under these plans, the UK will become the most difficult tax environment in the OECD, with tax advice un-affordable and inaccessible alongside a negative impact on our long-term tax compliance culture.

‘They will make it harder for people to access the tax advice they need, which means the wrong tax will be paid, costing both businesses and HMRC time as they try to resolve matters – taking their focus away from growth.

‘These proposals undermine the prospects for growth when we need it more than ever, and we are calling on the government to revisit these plans.’

ICAEW warned that the ability for HMRC to access confidential client papers via advisers where there is no dishonesty risks making the UK unattractive in the global market and could harm inward investment. ICAEW suggests that the legislation should be reframed to catch only actions that amount to misconduct by the tax adviser.

Another concern is that there will be a lower bar to penalise tax advisers for any tax return where HMRC considers more tax is due, even if the adviser has not acted improperly, could make tax advisers unlikely to take on clients with large tax liabilities such as large companies or high net worth individuals, as they would consider the risk too high.

The Law Society added: ‘The definitions of “tax adviser” and “interaction with HMRC” are so broad that many legal professionals who do not hold themselves out as tax specialists, or who are not in any real sense tax advisers, would be caught.’

At Pure Tax our Tax Investigation & Disclosure specialists are industry recognised and have dealt with hundreds of contentious situations with HMRC over the years. We are adept at managing interactions with the tax authorities to ensure that the investigation and disclosure processes run smoothly and that your interests are best protected.