TaxAdministrationHMRC: avoiding the issues

HMRC: avoiding the issues

What is the rationale behind HMRC plans to keep tax advisers in check?

Anyone – competent, qualified, or otherwise – is free to give tax advice.
This has lasted through Victorian self-reliance to New Labour’s rediscovery of
market forces – unbroken by wartime restrictions or the red tape of the post-war
consensus.

But now, HM Revenue & Customs may be reviewing this. After 18 months of
the disclosure regime, there are fewer schemes, but the tax advisory business is
still booming.

Something, therefore, must be up – and it must be stopped. The disclosure
rules will be extended, but tax advisers – including ‘bad advisers’ – will still
interpret them. Perhaps this is now too serious an issue to leave alone. In the
US, the practice of tax has long been regulated – by the IRS. And in recent
years this role has been reinvigorated and has scored some notable hits in the
battle against avoidance.

In fact, there should be a debate on regulation. Traditionally, most tax
advisers have been opposed to it. With a day job piloting your clients through
the maze of fiscal bureaucracy, you don’t want a busman’s holiday completing
regulatory returns on yourself.

But sentiment may be turning. We have got used to so many requirements – from
voluntary professional ones like CPD through money-laundering to disclosure of
‘schemes’ – that maybe it all just seems part of modern life.

Qualified practitioners, having mastered the ever-increasing complexity of
the tax code and subjecting themselves to professional supervision, wonder why
they should face such competition from the less qualified and the less
scrupulous.

The related fields of accountancy and law are already, and increasingly,
regulated. And, from left field, the forces of globalisation and EU
harmonisation will perhaps inevitably force the level of regulation up toward
the international norm.

Regulation raises many issues – the first being what is it for? If it comes,
it should protect the taxpayer struggling to cope with an over-complex system
and needing really good advice, just to comply. It should not be about
protecting the adviser’s trade, still less protecting the revenue by limiting
what advisers can say.

We do not know what HMRC is planning. There are, and should be, sanctions
against dishonesty and concealment. But if a disclosed tax scheme works and
really does frustrate the elusive ‘intention of Parliament’, it reveals a flaw
in the law. This can be a corrective, if lessons are intelligently learned.

In a free society, this is how things progress. It would be a totalitarian
idea to avoid the need for correction by curtailing advice.

John Cullinane is deputy president of the Chartered Institute of
Taxation

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