Raising standards in tax advice: protecting customers claiming tax repayments

Given that a third of the tax advice/accountancy sector is unregulated, which poses a serious consumer protection threat, costs the taxpayer hundreds of millions of pounds a year and creates considerable administrative burdens for HMRC, AAT cannot understand why only repayment agents have been identified as needing to be regulated rather than the wider tax advice market.

AAT agrees with much of the HMRC analysis of the problems posed by repayment agents and supports some of the proposals to deal with this issue. However, a considerably cheaper, far more effective and more broadly supported change would be to require anyone providing paid-for tax and accountancy services to be a member of a relevant professional body as already happens in more than 200 professions across the UK.

AAT believes that the use of assignments by tax repayment agents should not just be restricted but abolished. The limiting of assignments is a step in the right direction but given they were never intended to be used in this way, are being abused, cause problems for both taxpayers and HMRC, it would appear reasonable to go further and ban their use outright and instead rely on the perfectly reasonable “nomination” process that many agents already use.

Anti-money laundering (AML) regulation is vital but the current situation, whereby repayment agents are required to be regulated for AML purposes but are not required to register with HMRC, is an obvious loophole that must be closed. This is all the more striking given HMRC admits most repayment agents are not members of a professional body (and are therefore not being supervised for AML purposes by a professional body either).