On Thursday May 12, AAT’s Accountable campaign was nominated for the outstanding contribution to taxation by a non-profit organisation award at Tolley’s Taxation Awards 2022.

The ongoing campaign is pressing for action to tackle problems arising from unregulated accountants and the catastrophic impact they can have on businesses and individuals.

Everyone involved in the campaign is very proud of the nomination. It comes as HMRC begins a new round of behind-the-scenes workshops with stakeholders – including professional bodies – to chart its next steps.

HMRC considers its options

Indeed, HMRC is at a juncture with measures to raise professional standards. Last year, it abandoned plans to make professional indemnity insurance (PII ) mandatory, bowing to arguments made in AAT’s Accountable campaign and by insurers. Now it is looking at several ways forward – including the option of compulsory membership of a professional body.

As options are considered behind closed doors, several professional and business bodies, accountants, tax agents and advisers continue to support AAT’s call for the Government to provide better protection for consumers by all accountants being subject to an appropriate professional body.

Here’s what they say:

Industry comment

Chris Etherington, Partner, RSM UK

Far too many people find themselves the victim of a rogue accountant or tax adviser, meaning more regulation is desperately needed. Accountancy and tax rules are complex and impenetrable for a lot of people, and individuals need to be able to trust their advisers. It’s staggering that in this day and age, anyone can claim to be an accountant or tax adviser, potentially providing advice without any professional qualifications or insurance.

Similarly, advisers may not be bound by professional and ethical standards, leaving the door open to fraud, money laundering, tax avoidance and evasion. It’s time to address the issue of unregulated accountants and tax advisers so individuals and the Government’s revenues are better protected.

Maggie McGhee, executive director, strategy and governance, ACCA

The regulation of the profession exists – it’s the legal recognition of the term accountant that’s at question here, and the Government are looking at this area in their tax standards work. Currently, anyone can still call themselves an accountant.

Accountability is vital to the services accountants offer, so we support this campaign. It’s important that the client / consumer trust the advice they get from their accountant – otherwise there is no recourse if they want to complain about someone who isn’t a member of a professional body. They are then often left without protection or remedy because we and others can’t investigate the issue or begin disciplinary.

Knowing that their accountant is a member of a professional body would help a great deal. We hope the Government considers these proposals to protect the public from rogue accountants.

George Bull, tax expert and former tax partner at RSM

George Bull was recognised with a lifetime achievement award at Tolley’s ceremony.

Most tax practitioners are members of professional bodies and conduct themselves to the highest standards. Nevertheless, there is growing evidence of consumer harm caused by some unregulated practitioners whose advice may have shortcomings. There are far too many cases where what purports to be tax advice simply does not work. 

Clients – often employees – may be completely unaware of this until HMRC attempts to collect tax which ought to have been paid. They then find they have no support from the unregulated advisers on whom they had relied, and no funds to pay HMRC because the tax saving has been spent. Such unregulated tax advisers are a threat both to taxpayers and to the Exchequer. 

Having contributed to the Independent Review of Legal Services Regulation, I believe that it will only be a matter of time before regulation is required for all tax advisers.

Liz Barclay, Small Business Commissioner

The relationship between a small business and their accountant is a crucial one. Accountants offer technical financial help, and many are also able to help with the strategic planning for your business.

For many small businesses, the accountant is the only professional adviser they engage with, so a qualified, trusted accountant who understands the needs of small businesses and has knowledge of the sector they work in is the ideal. Because the relationship is so vital, it’s important that small businesses can have complete confidence in the advice and services they receive.

Regulation through membership of appropriate professional bodies would help deliver that protection and engender trust.

Ali Jaw, Manager FMAAT, MB Technical Services, Worcester

Membership provides checks and balances. People are protected. And it makes sure your skills gap is looked after. The regular CPD makes sure you’re competent in the area you’re advising. The way I see it, if you go to a doctor, you want to know that they know what they’re talking about, same with a solicitor – why not with an accountant?

The bodies need to continue to work together to lobby the Government and HMRC to make compulsory membership a law, so that from now on we have standard guidelines that all accountants have to follow. And mandatory PII is not good enough. The people who are not regulated will need to be insured, so costs will go up, making PII more expensive for all.

AAT has been championing this for a long time now. I give them a lot of credit. It’s not fair that we have to adhere to all this while competing with people who don’t, who don’t have to pay for membership or give time and money to maintain CPD.

Government should reconsider AAT’s recommendation to belong to an institution that will control and give oversight. I’m extremely proud to be a part of AAT, which is championing this.

Phil Shohet, Senior Consultant, Foulger Underwood, London

I believe in the concept of compulsory membership fully. People in their thousands simply enter the market and say they’re an accountant and, after the pandemic, businesses can’t be sure if they’re getting good advice.

It’s currently very to hire staff, so smaller practices might be hiring inexperienced and unqualified people and providing poor advice to smaller businesses. Smaller clients deserve quality advice to support the business and families into the future. You don’t want to go down to a rock bottom situation where people are giving poor advice, it affects the whole profession. People who’ve set up in their bedrooms without qualification are competing against qualified accountants, so standards aren’t being maintained.

Qualified accountants don’t sell themselves well enough, unless clients ask questions, so it comes down to price. Clients should ask how an accountant is regulated, do they have the right knowledge, the right experience in the right sector. It can be the difference between great advice and bad advice.

Clients don’t know the difference between chartered of certified. It’s how institutes promote themselves. Some bodies need to promote their members in this regard. It’s a great time for AAT to go out into the world and promote its membership.

Yvonne Cooper ACCA, Head of Finance, Access2Funding

Ensuring our employees are members of professional bodies is important as it adds credibility to the business and our tax relief experts, while also providing for a heightened level of trust from our clients. This is particularly pertinent right now given the increase in unscrupulous R&D tax credit firms, many of whom employ no qualified or regulated accountancy or tax employees. For example, at Access2Funding I am a member of ACCA.

I wholly support the Accountable campaign, and hope that the Government can see how important this is too – to make accountants accountable. It shocks me that, in 2022, there is still a lack of regulation in the tax profession. What’s worrying is that this isn’t common knowledge among the general public, people just automatically assume that an accountant is qualified, when sometimes this isn’t the case.

I’d like to see a change by the Government, whereby accountants, just like doctors and lawyers, have to be regulated by the industry.

John Cullinane, Director of Public Policy, Chartered Institute of Taxation

While the government is considering various options in relation to raising standards among tax advisers, we consider the most effective option would be to build on the good work already being done by professional bodies. To ensure high standards, the government could set out the criteria by which a professional body would be recognised as providing the necessary high standards for inclusion. 

A government regulator risks being both costly and ineffective. We understand that around 30% of tax agents are not professional body members and are responsible for most of the behavioural issues encountered by HMRC. It should, however, be recognised that 30% of agents do not represent 30% of the market (they are largely sole traders rather than larger firms) and while there remain challenges on how these agents might come within scope of regulation, we consider that transitional arrangements could be put in place to bring these agents up to the same standards as those currently applying to professional body members.

Ann White FMAAT, Abacus Accountancy & Payroll Services Limited, Epsom

Anybody can call themselves a bookkeeper or an accountant. It’s not fair. To onboard a client can take five hours – the letter of engagement, due diligence, you have to comply with anti-money laundering (AML), and if you don’t do it right, you risk losing your license. But if you’re not affiliated with a body, you don’t have to do any of that and nobody’s going to check.

They don’t need to do CPD, which qualified accountants need to do every year. It’s a bit demoralising when you come across people that don’t do any of it because they’re not regulated.

I think HMRC should do some form of campaign on TV and in the newspapers where they actually promote qualified accountants.

Accountable campaign objectives

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 ensure they are:

• appropriately qualified,
• undertake regular CPD,
• hold PII,
• are subject to the bodies’ disciplinary procedures and
• sign up to PCRT (professional conduct in relation to tax)

Neil Johnson is a freelance business journalist who contributes regularly to trade publications and member organisations, covering employability, recruitment, business trends and industrial analysis.