Overdue: it’s time to make tax advice accountable

Last month, the chancellor’s budget included a particular point of interest for us at AAT.

For 15 years I’ve had the pleasure and privilege of campaigning alongside AAT’s membership as we’ve driven our landmark campaign to raise standards in the sector which has more latterly been known as our ‘Accountable’ campaign. I say landmark because AAT’s call for all people working in tax to play by the same rules, accountable to the same high professional standards that the public expect of us, is nothing less than revolutionary.

This is not just about raising the standards of the profession, but even more so about protecting consumers – who so often suffer as a result of shortcomings in the current system.

Finally, in the Spring Statement last month, a consultation seeking to find a solution to  this issue was announced.

Why this is an issue

Two-thirds of complaints made to HMRC by consumers about tax advice they received, stem from the one-third of practitioners who are unregulated. Now you certainly don’t need an accountancy qualification to see that those numbers don’t make for good reading. Every year thousands of taxpayers and businesses are adversely affected by poor tax advice.

When AAT has spoken to consumers and businesses about their experiences with unregulated tax practitioners, some of the recurring issues include incorrect VAT or capital allowance claims, incomplete accounting records, not providing clearance or sharing relevant client files and failures in adhering to anti-money laundering procedures.

The impact of this is felt very sorely by those who fall victim to poor tax advice or rogue accounting, as there is no legal protection that enables simple compensation. This can be extremely costly for small businesses, can lead to fines from HMRC and could be the difference in an enterprise making it out of a tough financial year or not.

Including rather than ousting

It is important though that rather than ostracise those who are practicing without qualifications or membership, we help them get on the path to become the trusted and approved accountants that many will have the potential and passion to be. Mandatory membership of a professional body is by far the most effective and efficient solution to a potentially complex problem.

Research in 2021, showed that among unaffiliated tax practitioners who would consider membership, 45% saw merit in doing so for their own professional development, while 28% acknowledged that their membership may be valued by clients.

This shows that the benefits of professional body membership are not lost on those currently practicing without it. There’s a strong chance that many of them simply don’t understand how to attain the qualifications or are not confident in their ability to complete them. That’s why accessibility is important, and showing that we are willing, within the sector, to give them the support they need to bring themselves in line with the standards that our members already operate within.

How membership ensures standards

Attaining membership will allow access to being part of a professional community, to a support network where advice and guidance to reduce the instances of aforementioned errors in the future is readily available. AAT members can also access CPD resources to ensure they are not just at the required standard now, but can keep exemplifying the highest standards for the profession going forward no matter how accounting roles, legislation, technology and customer demands evolve and change.

A professional body also takes on a responsibility for consistent oversight to enhance protection for consumers. Tax practitioners who become members would be required to hold Professional Indemnity Insurance (PII), be subjected to the body’s disciplinary procedures, and sign up to the professional conduct in relation to tax (PCRT). Unaffiliated tax practitioners are not subject to regulatory oversight and have no requirements to adhere to standards of conduct and ethics.

Taking this opportunity

This is the best chance to drive up standards and ensure consistency, trust and clarity across the accountancy and tax profession through:

1. Enhanced professional standards
2. Consistent oversight, improved monitoring and effective enforcement
3. Greater protection for customers.

As mentioned, we’ve been pushing for a consultation on this for a long time, and it’s important that we seize the moment to make our voices heard and that others do the same too. The public have a right to expect the best from those they get advice from and deserve the peace of mind knowing that the person they are dealing with is being held to account themselves.

With that in mind, the consultation will run until Wednesday 29 May, giving plenty of opportunity for those representing other professional bodies, corporations, accounting practices or those who have had experience with this issue before to contribute their stories, their views and their voices, and hopefully together we can bring about this change that’s been over a decade in the making.

Details on how to respond are available on the consultation page.