AAT cautiously welcomes HMRC consultation response on protecting customers claiming tax repayments

AAT has cautiously welcomed HMRC’s response to its recent consultation on protection for customers claiming tax repayments.  

Currently one third of the tax advice sector is unregulated, yet they cause two-thirds of complaints to HMRC. This poses a significant threat to consumer protection, as well as costing the taxpayer hundreds of millions of pounds a year and creating a significant administrative burden for HMRC. 

While AAT welcomes many of the proposals in HMRC’s response, particularly around legislating to replace assignments with a nomination process, other suggestions require significant resource and are overly complex, such as pre-contractual disclosure forms. Additionally, although AAT does not object to requiring agents to register with HMRC, there are concerns about HMRC’s capacity to police this. 

By contrast, professional bodies such as AAT already have the ability and resource to monitor their members and do it well, offering a simple and effective solution to these issues. Therefore, AAT is calling on HMRC to build on the outcome of this consultation and include compulsory professional membership as a registration requirement for all tax advisors, not just repayment agents. This is something it has been calling for as part of its ongoing Accountable campaign. 

Adam Harper, AAT's Director of Professional Standards and Policy, said: "It’s good to see HMRC taking action against this unregulated sector, including the AAT recommendation to substitute outdated assignments with the nomination process. 

"However, the added layers of complexity and additional resource around a register and pre-contractual disclosures will be difficult and costly for HMRC to oversee. 

"If, instead, HMRC also required compulsory professional body membership, as AAT has called for in our Accountable campaign, it would give real teeth to the register as well as offer a much simpler and cost-effective solution."

AAT’s Accountable campaign calls for the introduction of mandatory membership of a relevant professional body for anyone offering paid-for tax advice, in order to protect consumers and raise standards in the accountancy profession. To support this, AAT has published a free e-book, What you should know before appointing an accountant (PDF), providing guidance for consumers on protecting their finances.

Our blog AAT Comment contains more information on the Accountable campaign.