In a report on the fraud, the parliamentary body said: ‘[HM Revenue & Customs] was unable to show that it had actively stepped up the reporting of accountants [and] tax advisers to their professional bodies for instances of misconduct in response to the Committee’s previous report.

‘We recommended that the department should make greater use of sanctions available to professional bodies to investigate unethical conduct by their members,’ the report said.

In a letter issued by former chairman Sir David Varney in late 2005, the tax authority implied that many advisers thought carousel fraud was just sophisticated tax planning.

The institutes have argued that if there are issues with members, the taxman should refer them to be disciplined by the institutes.