New AAT survey shows most people unaware no formal qualifications needed to offer tax advice
6 April 2021
As the 2021/22 tax year begins, new research published today by AAT has highlighted that many people are unaware that formal qualifications are not required for anyone offering paid-for tax advice, leading to a renewed call for the government to make membership of a recognised professional body mandatory for anyone offering paid-for tax or accountancy services.
The survey of over 1,000 people who had used an accountant or tax advisor, working for either them or their business, found that almost six out of ten people (59%) were unaware that anyone can trade as an accountant or tax advisor without any professional or formal qualifications. However, almost two-thirds (63%) of those surveyed also said that accountants and tax advisors should have formal qualifications.
Other findings from the research included:
- 64% of people thought accountants and tax advisors have played an essential role advising on the latest financial issues in relation to the coronavirus (Covid-19) pandemic and Brexit
- 57% said it should be compulsory for anyone offering paid-for tax or accountancy services to be a member of a recognised professional body
- 59% said accountants and tax advisors should undertake continuing professional development (CPD) to ensure their technical skills and industry knowledge are up to date.
As a result of the research, AAT is renewing calls for the government to introduce mandatory membership of a recognised professional body for anyone offering paid-for tax or accountancy services.
Adam Harper, Director of Professional Standards & Policy at AAT, said: "It's good to see that most people recognise the importance of having a good accountant, particularly during these challenging times for many individuals and small businesses. However, as this survey shows, the fact that so few people are aware that unregulated accountants are able to practise increases the risk of non-compliance with tax obligations and leaves consumers potentially open to financial risks if they use an unregulated advisor.
"Unregulated accountants make up a third of the accountancy sector, yet two-thirds of agent-related complaints to HMRC are about unregulated advisors. Mandatory membership of a recognised professional body for anyone providing paid-for tax and accountancy services would address this by providing reassurance to clients that they will have protection if anything goes wrong and that their accountant's technical knowledge is up to date. As we enter a critical stage of the UK's economic recovery, we are calling on the government to introduce this to boost consumer confidence and the reputation of the accountancy profession."
Case study: "A client incurred late filing fees due to an unqualified practitioner"
Rachel Martin is Director of striveX Accountants in Oxford and has had experience with dealing with the fallout from unqualified accountants for clients.
Rachel says: "We recently received professional clearance from someone trading as an insolvency practitioner who appeared to have no qualifications. When we requested professional clearance, they first ignored our requests then denied they had any information. When they did finally send over some documents, they only sent accounts which were already available publicly rather than the information we needed.
"We also couldn't ascertain any of the previous year's balance sheet breakdowns or any tax returns," she adds. "The practitioner had filed the accounts using HMRC filing software, so they didn't have records of any supporting documents. On top of that, the records they did prepare were incorrect and just copied the previous year's information and balances. That meant the previous year's accounts were incorrect, this year's accounts were delayed and late filing fees were incurred."
Rachel also expressed her concerns about how unqualified accountants can appear to be more affordable to clients.
She says: "More broadly, unqualified accountants will often allow for non-related business expenditure to be included in the accounts, including mileage to and from work, excessive use of home charges and personal expenses. In most cases these are individuals trading alone and therefore their fees only cover their time rather than the costs of a wider business. They're not VAT registered and so their fees are often below the usual market value, which leads to qualified accountants having to reduce their fees in order to remain competitive."
Case study: "An unregulated bookkeeper's actions had huge knock-on effects for the client"
Furqan Baig, AAT licensed member and managing director of Instruo Accountants in Dundee, has previously taken on clients who had encountered significant issues with their unregulated bookkeeper.
When he took on the client concerned – a property and estate agency business – it quickly became apparent that the payroll had not been registered.
"The payroll hadn't even been registered, but the payslips had been issued for 19 months," he explains. "We had to go back to HMRC and sort that all out. Luckily we were able to do that without them being charged any extra money."
While that was the case, it had knock-on effects for the client's business. The payslips showed tax had been deducted from employees' pay, but it hadn't been paid to HMRC: a criminal offence.
"I registered the payroll first of all and phoned a few departments and explained it needed resolving as quickly as possible. I then amended the PAYE updates for the two years: 2017/18 and 2018/19. After I fixed that, I spoke to HMRC and explained I would put the new figures into their software system that they could now use those figures for their payroll records. Thankfully, HMRC didn't charge them. They charged them the PAYE correctly, but there was no additional surcharge. It's the longest I've ever seen anyone miss their payroll by."
While that issue was resolved, it affected the business's cash position as it had to pay back the outstanding PAYE and, while it could absorb the hit, it was a cash flow set back.
"Luckily we were able to meet that over a few months," Furqan says. "As we'd given HMRC the report saying ‘this is going to be remaining PAYE for the rest of the year', we chose to pay some ahead as they knew they had cash coming in and it alleviated that stress on their cash flow for the next three-to-six months."
Aside from the administrative and cash implications, the client's business experienced other side effects, too. Employee disengagement was one, as they felt their trust had been violated by the issue.
Furqan adds: "Obviously the employees were shocked this had happened. Even though they weren't self-employed and they wouldn't have seen the process, their confidence in the process was hurt a little bit. That was eventually cleared up, though."
To see the impact on consumers that some unregulated accountants providing tax advice is still having, see our latest Accountable campaign news.
For more information about this issue, see AAT's latest blogs:
