HMRC publishes an updated standard on professional conduct for agents

HMRC has published an updated standard for agents.

The standard was first published on 3 August 2016 and has been revised to reflect the updated pan professional code of conduct on tax (the PCRT) that was published on 1 November 2016 and came into effect on 1 March 2017. The PCRT is published by a consortium of seven leading professional bodies involved in tax including ICAEW.

The updated HMRC standard is in effect a ‘PCRT lite’ and is really designed to set out some minimum expected standards on those tax agents who are not a member of a professional body. To confirm this, para 5.1 states that HMRC does not expect that this updated standards should place any further requirements on those meeting the PCRT.

This updated standard has been published to reflect the changes made to the PCRT in 2017. It imports some of the new standards in the PCRT on providing advice on tax planning. The key standard in the PCRT now included in HMRC’s standards is that:

‘Agents must not create, encourage or promote tax planning arrangements or structures that:

  • set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation
  • are highly artificial or highly contrived and seek to exploit shortcomings in the relevant legislation’

HMRC intends to use the updated standard to help guide agent behaviour and make clearer the case for HMRC interventions relating to agents. Agents not meeting the standard face a range of possible sanctions, including refusal to deal with the agent and suspending access to online services.

Tax Faculty comment

We welcome the updated standard, which should not impact upon ICAEW members involved in tax as they are already subject to the more extensive requirements of both the PCRT and the wider ICAEW ethical rules and regulations.

The publication of the updated standard does highlight that HMRC is taking a more active interest in the performance of agents who are not members of a professional body and also makes it clear that they too should not undertake aggressive tax planning of the type that does not meet the test set out in the PCRT. Coupled with the warning notice published by the Solicitors Regulatory Authority in in September 2017, setting out the duties of solicitors in relation to advising on tax avoidance and which is couched in similar terms, the direction of travel is clear: aggressive tax planning of the type that will fail the updated PCRT test is no longer acceptable behaviour for any tax adviser, whether or not they are a member of a professional body.