HMRC to mandate tax advisor registration and minimum standards

HM Revenue & Customs (HMRC) plan to raise the standards of the tax advisory market by introducing proposed legislation which will compel tax advisors to meet minimum standards and also register with them whenever they need to interact with HMRC when acting for a client. The proposed requirements are expected to come into play from 1 April 2026 but with a 3-month transition period.

These new proposals have been set out in the policy paper called ‘Modernising and Mandating Tax Advisor Registration with HMRC’ which was published on 21 July 2025, with the aim for the draft legislation to be inserted into the draft Finance Bill 2026. These proposals have been put forward following earlier consultations on introducing mandatory registration of tax advisors and tackling tax advisor non-compliance.

Some have welcomed the proposed changes as they see it as an active step in preventing rogue tax advisors, which has been a hot topic for some time. On the other hand, alarm bells have started to ring for others as, not long ago, the Law Society criticised the proposals for placing an undue burden on professions but with no real benefit to tax payers.

Proposals

A tax advisor will have a legal requirement to register with HMRC before communicating with them in relation to the affairs of a client or on behalf of a client. There will be some exceptions such as, advisors who are already working for HMRC. Moreover, the advisor along with their senior managers will also need to meet minimum standards.

One of the key questions which advisors will want to know is what exactly are the conditions which need to be met to be able to register? So far, the criteria set out requires a declaration that the advisor meets the standards expected of a tax advisor but which will be published in due course. They must not be subject to any outstanding tax repayments or be insolvent. They must also not have any unspent convictions or be subject to a decision by HMRC not to deal with them. 

The advisor must also be registered with, or be in the process of registering, with a supervisory authority for anti-money laundering purposes. Furthermore, advisors who are based overseas or who have a connection abroad maybe subject to additional requirements.

The advisor will also have an ongoing duty to meet the eligibility criteria and therefore should there be any change of circumstances they will be obliged to notify HMRC.

To register, the advisor must submit the required information in a format specified in an HMRC notice. This will set out the details of the advisor(s) and their senior managers of the organisation. They will also need to provide a statement to confirm that they are able to meet the eligibility criteria.

What will happen if an advisor fails to register or report any change in circumstances? In the event that this happens then this leaves the advisor at risk of receiving a financial penalty. At present figures are £5,000 or £10,000 if the advisor or their senior managers fail to register after receiving a compliance notice from HMRC. They will also have the discretion to suspend or prohibit the advisor’s registration.

Additional penalties could also be imposed such as a suspended advisor failing to tell a client they have been suspended. All of these will however be subject to review by HMRC or by a tribunal at appeal.

The main aim of HMRC’s proposals is to raise the standards regarding tax advice being given along with protecting taxpayers from advisors who are unable to meet the minimum standards.

HMRC will also have the power to disclose the information received as part of the registration process to other regulators or bodies. The disclosure of this information will however be limited nonetheless it could be argued that it is unfair as other members who are not regulated do not have to go through the same thing.

Concerns

Having considered the draft bill, the definitions of ‘tax advisor’ and ‘interaction with HMRC’ have been drafted very broadly. A tax advisor can be anyone who assists a person with their tax affairs, in the course of business. This could include merely helping with any documents likely to be relied upon by HMRC such as conveyancers who are merely filling out Stamp Duty Land Tax forms. This means that potentially conveyancers and others could fall foul of this legislation when they as legal professionals do not even offer themselves as tax specialists nor act as one could be caught out. 

Another issue which has been raised is that it imposes significant new burdens on tax advisors who are sole practitioners or in small firms as providing the required information will be onerous and unreasonable on them. 

There could also be practical difficulty within larger organisations in getting the required information concerning each senior manager which as a result could create uncertainty in the market and unfairness all round.

Moreover, most professionals such as, lawyers and those working in the finance industry are already subject to regulatory regimes so if the draft legislation does come into effect, it will cause duplication and could be argued as being disproportionate. It has also been suggested that there would not necessarily be a better outcome being delivered for the tax payer for the sake of trying to prevent rogue advisors. 

Potential solutions

As a start the definitions provided within the draft bill should be narrowed down to those who ‘routinely’ act as agents in relation to giving tax advice or hold themselves out.  It could also exclude professionals who are already regulated.

HMRC will also need to provide further clarification concerning the individual registration requirements and organisation level requirements so that there can be better scrutiny and transparency. 

Whilst HMRC’s intentions to raise the standards of tax advice being given is positive, let’s watch this space to see if they listen to the concerns raised by the other regulated sectors which if not changed could potentially result in unfairness.