The Government could make membership of a professional body mandatory to clamp down on “incompetent, unprofessional or unscrupulous” tax advisers.

Compulsory professional membership is one of three options being considered as a means of creating enforceable professional standards across the profession.

The move, announced after the budget, is seen as a “historic win” by AAT, which has campaigned for regulatory reform for over a decade.

Reform is needed to protect clients from poor advice. Two-thirds of complaints about tax advice to HMRC are about the one-third of accountants who are unregulated. HMRC research has also shown that unaffiliated agents don’t work to recognised standards:

• Just 4% of unaffiliated agents follow the Professional Conduct in Relation to Taxation (PCRT).
• Only 18% follow HMRC’s standards of tax advice.
• 45% don’t know what the standard is.
• 80% of unregulated accountants don’t hold a professional qualification.

In a 12-week consultation between now and 29 May, the Treasury will seek views on  three possible ways to tackle the problem:

• mandatory membership of a recognised professional body;
• joint enforcement by HMRC and the industry; and
• regulation by a separate statutory government body.

AAT welcomes the development. Through its Accountable campaign, it has long argued that membership of a professional body is the best way to drive up standards, as it would require tax agents to:

• be appropriately qualified,
• undertake regular CPD,
• hold Professional Indemnity Insurance (PII),
• be subject to the body’s disciplinary procedures, and
• sign up to PCRT (professional conduct in relation to tax).

Although compulsory membership is just one of three possible regulatory models the government is considering, for AAT’s Director of Professional Standards and Policy Adam Harper the choice is clear.

“AAT and our members have been banging the drum through our Accountable campaign over the years for a very simple, but very powerful principle: by making the unregulated operators accountable for their conduct we can ensure consistent, reliable professional standards consumers can trust. 

“We know that the public expect a professional, honest service when they engage accountants and tax advisory agents. Most are shocked when they hear that, if they have engaged an unregulated, unsupervised, tax agent, there’s no method of recourse if things go wrong. 

“It’s in the interests of the whole profession that every person engaged in tax advisory are conducting themselves in ways that upholds high professional standards and protects consumers.”

Full details of the consultation can be found here.

David Nunn is Content Manager at AAT.