Government must regulate the unregulated – now!

Phil Hall, AAT Head of Public Affairs & Public Policy, introduces AAT’s new campaign to regulate all accountants.

As many readers will know, a third of the accountancy sector is effectively unregulated.

Anyone can call themselves an accountant, there is no need to have any qualifications, have undertaken any Continuing Professional Development (CPD), demonstrated any relevant knowledge or to be a member of a recognised professional body.

Why does this matter?

According to HMRC, approximately two-thirds of complaints they receive about agents relate to the one third who are unregulated. That should be enough to take action.

But throw into the pot the likely higher incidences of encouraging and facilitating tax avoidance, tax evasion and money laundering – not to mention the increased likelihood of filing errors and bad advice (all ultimately paid for by the end user not the unregulated adviser) – and resolving this issue appears to be not just a “nice to have” but essential.

Why now?

The problem of unregulated accountants has existed for many years. Its financial impact is huge – and growing in significance.

With over £400bn of coronavirus debts needing to be repaid, tackling the problem of unregulated accountants could bring much-needed revenue for the Exchequer.

According to BDO, in 2019 unregulated agents were thought to have helped encourage businesses to overclaim R&D Tax Credits by over £600m This is just one area of tax policy – imagine the impact of unregulated accountants and tax advisers across the board; their impact could possibly run to billions in lost revenue.

Another factor making the need for action particularly pressing is the increasing regulatory pressure being applied to auditors. 

The welcome reports from the Competition & Markets Authority and the Government commissioned Kingman Review mean that the audit sector of the accounting industry will probably have one of the strictest regulatory regimes in the world. This serves to bring the manner in which the rest of the accountancy sector is regulated into much sharper focus – demonstrating the disjointed nature of regulation in the UK. How can auditors be subject to such stringent conditions when high street tax advisers and accountants are effectively left to their own devices?

The solution?

To AAT, the solution appears both simple and obvious. It’s a recommendation AAT has been making repeatedly in recent years (most comprehensively in our 2020 response to the Government consultation on the matter). Put simply, the Government should legally require anyone offering paid for tax/accountancy services to be a member of a professional body – as happens in other professions.

This would mean they would have to:


When AAT surveyed MPs in December 2018, an overwhelming majority agreed with us on this issue. 83% of MPs said anyone providing tax or accountancy services to the public should be a member of a relevant professional body.

We are in the process of asking MPs the same question again to establish if there has been any change in support since the general election of December 2019, which resulted in a significant change in the composition of Parliament. Of course, even 99% support may not be enough as it’s the Treasury – specifically, the Financial Secretary to the Treasury – whose decision this remains. Unfortunately, there does not appear to be any evidence of a Ministerial desire to take effective action.

Next steps

Various tax avoidance scandals, most notably the recent loan charge debacle (where unregulated accountants and tax advisers were identified as having played a large role) forced the Treasury to consult on the issue last year.

However, the outcome of that consultation was very disappointing, containing little more than a proposal to require unregulated accountants and tax advisers to hold personal indemnity insurance – something that any accountant or tax adviser who is a member of a professional body has been required to do for decades.

This may provide some limited recourse for taxpayers receiving bad advice but does almost nothing to raise standards, reduce tax avoidance, tax evasion or money laundering or reduce the mistakes and poor advice that so frequently cause problems in the first place.

AAT will be working with others, including members, to press the Government to take much needed, long-overdue and effective action on this issue.

Phil Hall is AAT's Head of Public Affairs and Public Policy.

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