Consultation outcome

Enhancing HMRC's ability to tackle tax advisers facilitating non-compliance — Summary of responses

Updated 21 July 2025

1. Introduction

The consultation ‘Enhancing HMRC’s ability to tackle tax advisers facilitating non-compliance’ ran from 26 March 2025 to 7 May 2025. This document provides a summary of responses and next steps.

The consultation discussed options to enhance HMRC’s powers and sanctions to take more effective and stronger action against professional tax advisers who facilitate non-compliance in their client’s tax affairs. It proposed a complementary suite of potential measures to more effectively review and sanction professional tax advisers whose actions contribute to the tax gap or otherwise harms the tax system.

The government is grateful to those who contributed their views, evidence, and time to respond to this consultation. In total, 116 written responses were received, primarily from professional and representative bodies, tax advisers, charities, businesses, and legal firms. HMRC also held 31 roundtable engagement events in April and May 2025 to discuss the content of the consultation with interested stakeholders. These events were held with professional bodies, tax agents, legal firms, and charities, amongst others.

Most respondents agreed HMRC’s powers to tackle non-compliance could be more effective and showed their support for enhancing existing powers. They supported both for increasing HMRC’s information powers to obtain evidence of non-compliance earlier than currently allowed, and further disclosures to professional bodies when unprofessional conduct is recognised. Further information on proposed enhancements of powers can be found throughout chapter 2, along with responses from the consultation.

There was an overarching theme throughout responses that the proposed enhanced powers are to be used only when there is clear evidence of poor conduct, and to ensure legislation and definitions are clearly defined to protect tax advisers from unnecessary investigation.

The following chapters will provide an overall summary of responses to the consultation, the government’s response to the consultation, and next steps.

2. Responses

Enhanced powers in principle

This section relates to question 1 to 4 in the consultation (see annex B) which explored enhancing powers to enable HMRC to investigate and request information from tax advisers.

Current HMRC powers

Most respondents strongly agreed that HMRC’s powers to tackle tax advisers who harm the tax system could be more effective. Many responses said that poor tax advisers harm the tax system and adversely affect the reputation of their profession. Some respondents noted that current deterrents and consequences could be better in addressing instances of deliberate acts to harm the public purse. A few respondents were unconvinced that HMRC needed further powers as they felt there was a lack of evidence that existing powers were insufficient. They also raised concerns about the need for sanctions to be proportionate to the behaviour evidenced.

Enhanced powers to allow more effective action against non-compliance

Most respondents agreed in principle with the aim of enhanced powers allowing for effective, and proportionate action. However, many respondents expressed the need for adequate safeguards and for HMRC to take care with such powers. They commented that most professional tax advisers submit correct information and do not wish to cause non-compliance. While many supported the aim of the consultation, some respondents requested clarification on the definition of ‘non-compliance’ and suggested this should not include non-deliberate or unintentional behaviour. Some respondents also suggested that powers used without adequate checks or evidence of severe behaviour would risk undermining trust and damaging adviser-client relationships. Some respondents suggested that a prompt appeals process would be required to allow agents to clear their name and resume business without unnecessary delay.

Actions in scope of proposed changes

Most respondents supported broadening the scope to include deliberate and intentional behaviour which systematically seeks to exploit the tax system, especially where those behaviours were repeated.

While there was a consensus on the types of behaviour in scope, many expressed their concerns around safeguarding tax advisers to prevent reputational and financial damage and protect good advisers, saying that they are valuable assets to the tax system. Many thought there should be a balance between penalising large-scale abuse of the tax system, and cases where genuine technical or administrative non-compliance errors are made despite an adviser taking reasonable care. Some respondents were not in favour of widening the scope and expressed the view that it was more appropriate for HMRC to target powers to only where an adviser has acted dishonestly.

Suggestions for how HMRC might enhance powers to tackle non-compliance facilitated by tax advisers

Several respondents suggested that HMRC should provide training and more guidance to tax advisers, to reduce non-compliance amongst advisers. A few respondents proposed whole-scale reform of the UK tax system could help to tackle non-compliance by reducing opportunities to harm the tax system. These included reducing current complexities and changing the approach of ‘pay now, check later’.

Scope of the proposals

This section relates to questions 5 and 6 in the consultation (see annex B) and explored opinions on who the proposals should apply to. The proposed scope included people who act by way of business to provide tax advice or services in relation to UK tax, regardless of whether they are in the UK or overseas.

Comments on who should be in scope

Most respondents agreed that those who advise on UK taxation acting by way of business regardless of whether they are based in the UK or overseas should be in scope. Some of those respondents reported that the scope should also include those who advise on tax affairs but not by way of business, such as pro bono agents or charities. A few respondents felt the proposed scope was too broad.

Some respondents who agreed with the scope noted it should be limited to unscrupulous tax advisers. Some reported more was needed in legislation on how the enhanced powers could be used for overseas tax advisers, as enforcing the powers overseas would be difficult.

Some responses suggested certain professions should be in scope of the proposals. However, other responses thought it would be more appropriate for professional bodies to tackle poor behaviour in the first instance (Disclosures chapter below provides further information on this).

Other groups HMRC should consider

Some respondents did not believe there were other groups HMRC should consider. A few respondents commented that the definition needs to apply to all tax advisers, regardless of how a person identifies their work.

Some responses suggested groups who provide tax advice that should be in scope, including:

• software developers and providers
• legal professionals
• advice via social media
• anyone providing tax advice
• property agents

Some respondents mentioned professions which they believed should not be in scope, which included:

• charities
• family and friends
• auditors
• investment platforms

Investigation powers

This section relates to questions 7 to 13 in the consultation (see annex B) and explores stakeholder views about whether HMRC should consider additional or alternative methods for gathering information about tax advisers who may be contributing to non-compliance. The questions invited suggestions about how information could be gathered more effectively, proportionately, and in ways that support early intervention.

The proposed changes to the investigation powers included:

• combining the requirement to issue a conduct notice to a tax adviser with the issuing of an information notice
• allowing HMRC to request information to assess the actions of a tax adviser where HMRC reasonably suspects the tax adviser has facilitated the inaccuracy in a taxpayer’s document or return
• removing the requirement for all file access notices to be tribunal approved

Proposed changes to the way HMRC can obtain tax adviser information

Most respondents agreed that it should be easier for HMRC to obtain information from tax advisers where there is reasonable suspicion of facilitation of inaccuracies. These respondents generally supported the principle but emphasised the need for appropriate safeguards and clarity in application.

Suggestions included independent review mechanisms, clearer thresholds, and a graduated enforcement model based on severity and frequency of behaviour. Participants also emphasised the need to ensure that HMRC only requests information when it can justify doing so by meeting clearly defined tests to use the power.

A few respondents expressed concerns about making it easier to request information. While some acknowledged the intent behind the proposed powers, they raised significant reservations about how they might be implemented in practice, including:

• erosion of existing safeguards, and whether revised safeguards would be sufficient to prevent HMRC overreach
• ambiguity of definitions, in particular whether minor errors or legitimate differences in interpretation would be

Several respondents argued that the current framework already provides HMRC with sufficient powers, and that any expansion should be accompanied by robust procedural protections. Others suggested that improvements in HMRC’s internal processes and clearer guidance would be more effective than legislative change.

‘Reasonable suspicion’ as the threshold for conduct and information notice

Respondents were divided on whether ‘reasonable suspicion’ is the appropriate threshold for issuing conduct and information notices. Supporters generally viewed the threshold as a familiar and proportionate standard, particularly when supported by evidence or used within a structured enforcement framework. Several respondents noted that ‘reasonable suspicion’ is already well understood in other regulatory contexts and could serve as a practical basis for early intervention.

Opponents, however, expressed concern that the threshold is too low, too vague, and open to subjective interpretation. Many argued that it could lead to overreach, reputational harm, and unwarranted investigations or ‘fishing exercises’, particularly in the absence of independent oversight or clear evidentiary standards.

Some advocated for retaining the current dishonesty standard. Others proposed alternatives like ‘reasonable prospect of success’, or corroborated evidence reviewed by multiple officers.

There was strong support for safeguards such as published guidelines, independent review, and appeal rights to preserve fairness and public confidence.

Proposed changes to the powers to gather information from tax advisers

Most respondents supported the changes. Most respondents viewed the reforms as a proportionate way to enhance HMRC’s ability to act when concerns arise. They noted that compliant advisers should have no difficulty providing information. There was also support for combining conduct and file access notices.

Although the majority of respondents were supportive, many respondents emphasised the need for clarity, fairness, and proportionality in how the powers would be applied. Concerns included the potential burden on compliant firms and the importance of clear guidance, transparency, and accountability. Some respondents suggested publishing data about how often the powers are used to ensure HMRC is accountable for the use of the powers.

Some respondents expressed mixed views about the scope and impact of the reforms. They stressed the need for well-defined terms and robust safeguards to prevent misuse and ensure the powers are applied consistently and justly. Suggestions included independent review panels, published criteria, and oversight mechanisms modelled on existing frameworks to ensure proportionality and maintain public confidence.

Respondents who opposed the proposals raised concerns about the breadth of the powers. A key theme was the potential impact on trust and professional relationships. Some warned that reducing independent oversight could undermine confidence in the system and cause reputational harm to advisers acting in good faith, especially where errors stem from ambiguity rather than misconduct.

Potential changes to safeguards required for Schedule 38 to be used more effectively

Most respondents supported removing the requirement for a tribunal approval to obtain a file access notice, citing improved efficiency and suggesting that removing tribunal approval could help HMRC act more swiftly in time-sensitive cases.

Many respondents supported the inclusion of safeguards in the process for issuing file access notices. There was broad agreement that powers should be balanced with checks to ensure fair and proportionate use.

Some respondents viewed tribunal approval as a vital safeguard. They warned that removing it could lead to disproportionate or premature action. Respondents raised concerns about reputational harm, especially if notices are based on limited or subjective information.

Some felt that clearly defined internal review mechanisms and the right to appeal would provide sufficient oversight. However, overall, there was a preference for maintaining third-party oversight, such as tribunal involvement or independent review mechanisms.

Potential unintended consequences of the proposed changes

Some respondents identified some potential unintended consequences from the proposed changes, such as increased compliance costs, reputational harm, and disproportionate impacts on compliant advisers.

Common concerns included risks that:

• well-intentioned professionals could be unfairly targeted due to vague thresholds or broad powers
• investigations could harm advisers’ credibility and client relationships
• HMRC may not proceed with a cautious, proportionate, and transparent approach
• professional indemnity insurance costs may increase
• advisers may withdraw certain services or may avoid working with clients with complex tax affairs
• market distortion may occur, for example if legal professional privilege protects certain information from being disclosed to HMRC demand may shift towards legal professionals

Suggestions to reduce the risks included piloting the proposals on a small scale to identify issues early and adopting a tiered oversight model. Respondents argued that this would ensure powers are used appropriately without discouraging compliance or increasing costs unnecessarily.

Some respondents expressed confidence that, with safeguards in place and powers applied within a clearly defined scope, significant unintended consequences were unlikely. Many felt that any issues could be addressed through implementation guidance rather than changes to the proposals themselves.

Alternative ways HMRC could gather information related to tax advisers who cause harm to the tax system

Supporters of additional methods proposed a wide range of ideas to enhance HMRC’s intelligence-gathering capabilities. These included:

• using data analytics, AI, and social media monitoring
• structured whistleblowing channels and direct taxpayer feedback
• closer collaboration with professional bodies, clearer rules for adviser accountability, and improved reporting tools

Many viewed these suggestions as either complementary to the proposed reforms or as more proportionate alternatives.

Respondents also raised formal oversight and registration. Some advocated for mandatory adviser registration or declarations on tax returns to improve traceability and accountability.

Those who did not support alternative ways for HMRC to gather information generally believed HMRC already had sufficient powers and channels, highlighting that harm to the tax system is already covered by powers tackling facilitation of tax avoidance schemes.

Financial penalties

This section relates to questions 14 to 23 in the consultation (see annex B) and relates to enhancing financial penalties for tax advisers who cause harm to the tax system.

Most respondents agreed that penalties were needed to tackle tax advisers who facilitate non-compliance that causes harm to the tax system. Most respondents also agreed that the government should reassess how penalties for tax advisers are determined to enhance deterrence against non-compliance.

Some responses to this section highlighted that respondents were unfamiliar with the existing penalties, making it difficult to know whether existing penalties are effective deterrents. A lack of awareness of the penalty was also cited as a reason that it was not an effective deterrent. Respondents emphasised the importance of making sure that the penalty was proportionate to the behaviour. Respondents suggested having different tiers of penalties for different conduct, for example by using a fixed range for lower-level behaviour.

Many respondents recommended that HMRC introduce clear guidance about when penalties could be issued and how they would be calculated.

A few respondents mentioned the behavioural penalties reform consultation and that the design of penalties for tax advisers should align with other HMRC penalties.

Penalty approach

The vast majority of respondents supported either:

• option A — a penalty based on the potential lost revenue
• option B — a penalty based on the tax adviser’s fees

There was approximately equal support for both options.

Option A — a penalty based on the potential lost revenue

Respondent’s reasons for supporting option A included that:

• the penalty amount would reflect the harm to the tax system
• it would be an effective deterrent, including to prevent low-fee tax advisers providing advice in areas they aren’t competent in
• it would be easy to calculate
• there would be parity with taxpayer penalties, which are also calculated based on the potential lost revenue

Those who disagreed with option A:

• felt it wasn’t proportionate to the benefit a tax adviser receives from facilitating non-compliance, and could lead to the penalties being unaffordable and HMRC being left with more debts to chase
• highlighted a risk that tax advisers could avoid taking on clients with high tax bills or complex tax affairs due to the risk of high penalties should errors occur; this concern applied to small businesses in particular, fearing that advisers become liable for penalties where there is misunderstanding or a difference in interpretation of the law

Respondents highlighted wider risks to the tax advice market, including that tax advisers may significantly raise their fees to enable them to pay any penalties. Some respondents mentioned that the impacts could lead to competent tax advisers leaving the market as they are unable to accept the risks.

Option B — a penalty based on the tax adviser’s fees

Respondent’s reasons for supporting option B included that:

• it is proportionate to the benefit to the tax adviser of facilitating non-compliance
• it is a balanced approach that offers a sufficient deterrent without significantly impacting the risk for most tax advisers

Some respondents thought that it would be difficult for HMRC to work out what the fees received by a tax adviser were, which could lead to the penalty being unusable. A concern raised by some respondents was that a fee-based approach may not work where a tax adviser fee was connected to their ‘success’, such as where a fee was only due where a repayment was made by HMRC.

A few respondents stated that option B was not proportionate to the harm done to the tax system, particularly if the tax adviser used a fixed-fee model which could be much lower than the tax lost.

Other options

Only a few respondents supported option C — a penalty based on a business’s global turnover — or any other approach.

Those who supported option C felt it would have the greatest deterrent. However, most respondents had concerns with option C, including that it would be very complex for HMRC to calculate, that it would be disproportionate as not all turnover would relate to tax services, and it would not be proportionate to the harm done to the tax system. Some other respondents suggested using different approaches, including all the options in the consultation, to tailor the penalty to the situation.

Escalator

Most respondents agreed that the penalty should escalate in stages, based on additional instances of facilitation of non-compliance. Some respondents supported escalation but felt that the initial penalty should still be high enough to discourage repeat behaviour. Some respondents thought penalty escalation should be limited to the worst behaviour.

Some respondents discussed the relationship between the approach to the penalty and whether the penalty could be escalated. For example, some respondents felt that a penalty based on potential lost revenue could not be escalated for repeated facilitation of non-compliance as the amount of potential lost revenue would be different for each instance and could be lower.

Some respondents mentioned that linking the penalty amount to the type of behaviour and having higher penalties for more serious behaviour could be more effective than escalating the penalty for repeated behaviour.

Minimum and maximum penalty amounts

Most respondents recognised that the £50,000 maximum of the existing penalties was not high enough to be an effective deterrent. Specific issues raised by respondents included where there was dishonest conduct, where the tax adviser is a larger business, or where the tax lost is significantly more than £50,000. Many respondents agreed that this amount would be considered a cost of doing business by unscrupulous tax advisers.

Most respondents thought that there should be no maximum penalty amount, such as the existing £50,000 maximum. Respondents who supported the no maximum penalty amount proposal commented that this would be more proportionate to the tax loss and the actions that facilitated non-compliance.

Many respondents commented that there should not be unlimited penalties, and that there should be a maximum proportionate to the tax lost or the tax adviser’s fees (dependent on the context of the individual case). For example, some respondents commented that the penalty amount should not exceed the potential lost revenue.

Some respondents felt that a maximum penalty would help to give certainty to tax advisers and could reduce the impact on the tax advice market. For example, some respondents commented that professional indemnity insurance costs would be less likely to significantly rise if there was a fixed maximum penalty.

Some respondents felt that a minimum penalty was needed. Respondents felt this would:

• help ensure that use of the powers was proportionate and not used for low levels of non-compliance
• reduce the burden on HMRC of calculating very low penalties

Where a minimum penalty was suggested, it was generally in line with the existing penalty minimum of £5,000.

Penalties on businesses

The majority of respondents supported extending the powers so that penalties could be charged on tax adviser business entities. Many commented that the business:

• sets the work culture
• is responsible for those it employs
• is the entity a client will have a contract with for provision of tax advice
• often assigns multiple tax advisers to a single client

Most respondents advocated for flexibility to use the powers on a business or an individual tax adviser, depending on the circumstances of the case. Many respondents mentioned that in deciding whether to penalise a business or individual tax adviser, HMRC should consider the processes the business has in place to prevent the facilitation of non-compliance by their employees. Many respondents suggested checks they would expect responsible businesses to have in place.

Some respondents highlighted the risk of businesses being dissolved and new businesses being established with the same controlling directors or partners. It was suggested that liability for penalties should be extended to directors and partners to reduce this risk.

Other considerations

Many respondents suggested factors HMRC should consider when calculating penalties, including:

• the lifestyle, assets and net worth of the business owner or tax adviser
• the ability of a tax adviser to pay any penalties charged
• whether the business or tax adviser is a member of a professional body
• whether the business or tax adviser has been subject to any previous sanction, including penalties

Some respondents suggested HMRC should consider suspending penalties to give tax advisers an opportunity to demonstrate that they can change their behaviour and become compliant.

Some respondents stated that it was important to prevent double jeopardy, and some respondents also suggested alternative approaches HMRC could consider either instead of or alongside penalties, including:

• running education campaigns
• improving guidance to prevent errors occurring
• disqualifying directors, or otherwise stopping a tax adviser from acting
• working more closely with professional bodies

Some respondents discussed alternatives to penalties, including powers HMRC already has available. For example, a few respondents mentioned that criminal offences are a better deterrent and that HMRC should make use of existing criminal sanctions.

Public interest disclosures to professional bodies

This section relates to questions 24 and 25 in the consultation (see annex B), and relates to HMRC having the powers to make further non-Public Interest Disclosures (non-PID) to professional bodies, as well as continuing with Public Interest Disclosures (PID).

Most respondents supported HMRC making further non-PID disclosures to professional bodies. The professional bodies and large accountancy firms supported the introduction of non-PID disclosures but required further discussion between HMRC and the professional bodies to determine the parameters for reporting and consequences of reporting. Several respondents indicated that HMRC needed to make clear what the proposed non-PID disclosures are intended to achieve.

Many respondents welcomed the reporting of themes or patterns of poor behaviour as this could, ultimately, raise standards as professional bodies could use that intelligence to:

• tailor continuous professional development (CPD)
• inform risk-based regulation of members

Most professional bodies welcomed the opportunity to receive intelligence that would assist them to support members and raise standards by delivering appropriate CPD and take action to prevent errors from escalating, rather than acting in a purely punitive capacity. Two professional bodies suggested the creation of an information gateway between HMRC and the professional bodies, to enable professional bodies to intervene to raise standards of the tax work performed by members and so protect the public. A few respondents discussed disclosures acting to prevent problems before they need to be corrected.

Some respondents were concerned that non-PID disclosures would add to the pressure on resources for professional bodies with the consequence there would not be sufficient resource to fully investigate the formal PIDs. Some replies reported concerns that the additional work for the professional bodies in reviewing non-PID disclosures would lead to increased fees, which could push more advisers into choosing not to join a professional body.

Some respondents raised concerns that disclosures can only be used for tax advisers that belong to a professional body. This could create some unfairness by penalising advisers who are registered with professional bodies when no action is taken against unaffiliated advisers. One reply suggested that HMRC should be required to intervene in cases where it would have made a disclosure to a professional body, but the agent concerned does not belong to one.

Several replies were concerned that non-PID disclosures could be used as a form of retaliation by HMRC in cases of disagreement or subjective viewpoints. A few replies believed that legislation would have to be amended to allow HMRC to make non-PID disclosures.

Views on the types of behaviours or activities considered appropriate for HMRC to make further disclosures about

Suggestions about the types of behaviours or activities appropriate for HMRC to make further disclosures about included:

• all non-compliance or concerns that are not formal misconduct
• poor technical ability
• unprofessional or offensive behaviour
• isolated, occasional, or low-level errors
• repeated errors
• where other criminal or civil offences are involved

There was some support for sharing details of patterns or trends of poor behaviour or errors with the professional bodies.

Many suggested intentional non-compliance, malpractice or breaches of professional conduct in relation to tax be disclosed. However, this is already considered for formal PID disclosure.

Publication powers

This section relates to questions 26 to 33 in the consultation (see annex B) which proposed introducing legislation to give HMRC a broad power of publication for sanctions imposed on tax advisers and sought views on what the scope and safeguards should be. The proposals included 2 suggestions for the form publication could take:

• short-form publication: lists on GOV.UK, updated at regular intervals, of tax advisers that HMRC has imposed sanctions or restraints on, and why
• long-form publication: in more extreme and complex cases, censuring statements detailing the issues of concern about a specific tax adviser, similar to those published by the Financial Conduct Authority or Advertising Standards Agency

Public interest, awareness, and customer choice

Most respondents said it was in the public interest for HMRC to publish more information about its activity, such as the details of tax advisers subject to a formal sanction by, or a restriction on their dealings with, HMRC. Some respondents thought that having a public list of tax advisers who had sanctions imposed could help inform customer choice. The impact of publishing on an adviser’s reputation was also commented on, with some suggesting this was a good way to encourage good behaviour. The importance of the right level of publicity and visibility was also mentioned. To maximise the effectiveness of the power, it was suggested that HMRC used a range of channels to reach different audiences. This would include not only lists on GOV.UK, but also utilising social and wider media more broadly.

Threshold, scope, and criteria for publication

The consensus was that most, but not all sanctions should be included. The vast majority supported publication where there was clear evidence of fraud, dishonest behaviour or repeat offences. Some also thought that deliberate and careless behaviour should also be included. Balanced against that was a prevailing view that temporary sanctions or one-off errors wouldn’t need to be included. This tied in with the broadly held opinion of many respondents that publishing everything could create a large and complex amount of data that may be not useful to the public, and risks diluting the deterrent effect that publishing aims to achieve.

Length of time the sanction should remain viewable

Responses on this varied considerably. Some suggested 3 to 6 months for short-form publication, whereas others suggested that it should remain visible until there was no longer a risk, or even indefinitely. However, there was a shared view in that there was a need for proportionality and a balanced approach.

Detail on specific sanctions

The consultation suggested some sanctions that could be included, inviting comments on suitability. There were mixed views on suspension of agent codes. Some thought that this sanction should not be included at all. Others thought it was acceptable to include this sanction, but only in cases where HMRC has suspended the code for standards breaches rather than where it has suspended as a safeguard (such as in cases where it suspects an account has been compromised). A small number of respondents felt that HMRC should not publish details of PIDs made until after the outcome of the professional body investigation, as to do so could be prejudicial to the adviser.

Safeguards and a suitable framework

The consultation document acknowledged the need for appropriate safeguards to be in place, and invited comments on what the framework could include.

There were mixed views on whether the proposals provided for a fair, proportionate, and workable framework. Some respondents agreed that the proposals looked fair and reasonable and should focus on the severity of the misconduct. For example, minor sanctions could be exempted or anonymised, in the same way that HMRC aggregates totals of some penalties charged under the Money Laundering Regulations.

However, some respondents had concerns around the levels of governance and independence around signing off publication. Some were content for HMRC to own the process, subject to reviewing officers having a sufficient degree of separation from the team proposing publication. But others felt the independence might need to go further, suggesting an independent panel or committee in more contentious or difficult cases, particularly where long-form publication was being considered.

The vast majority of respondents agreed that sanctions should only be published once suitable representations have been allowed. There were mixed responses on whether short-form and long-form approaches would allow a degree of flexibility for HMRC to act in a fair and proportionate way. Many were not sure or didn’t know, but there was general support for the principle that different forms of publication could apply in different circumstances.

Other safeguards proposed

Some additional general safeguards proposed by respondents were:

• HMRC publishing annual statistics on the use of tax adviser notices, penalties, and outcomes, to build confidence and identify disproportionate trends
• tiered interventions based on risk
• clear definitions and scope

3. Government response

The government is grateful for views submitted on enhancing HMRC’s powers and sanctions and is committed to working on closing the tax gap and ensuring everyone pays their fair share of tax. The proposals within this consultation aim to make it easier for HMRC to target those who facilitate non-compliance.

The government acknowledges respondents’ desire for HMRC to ensure any changes made to current powers and sanctions are proportionate and target the right tax advisers. As drafted, the proposed changes will therefore bring into scope only those who deliberately facilitate non-compliance, they do not target tax advisers who make genuine, one-off, accidental errors or differences of legal interpretation.

However, the government remains keen to explore ways to tackle incompetence and unreasonable errors among tax advisers. We want to incentivise advisers to take reasonable care to avoid facilitating tax non-compliance. The government is therefore considering what the appropriate levers are to tackle careless behaviour by tax advisers. We would welcome views on this as part of the consultation on the draft legislation, as well as views on alternative ways to tackle non-compliance facilitated by tax advisers.

The government will define those in scope of the new enhanced powers and sanctions. The scope will include those who advise on UK taxation acting by way of business regardless of whether they are based in the UK or overseas. Both business entities and individual tax advisers will be in scope.

The government will amend the investigation powers HMRC currently has, which will allow HMRC to request information to assess the actions of a tax adviser where HMRC reasonably suspects the tax adviser has facilitated an inaccuracy in a taxpayer’s return or document.

The government will also allow file access notices to be issued without tribunal approval, which will expedite the process to prevent unscrupulous tax advisers from continuing to provide inaccurate advice or information. However, the government will introduce alternative robust safeguards to approve file access notices, including a right to appeal to Tribunal.

The government will work to ensure the term ‘reasonably suspect’ is defined to prevent any ambiguity or confusion amongst taxpayers, tax advisers, and HMRC itself.

The government will amend the penalties legislation so that penalties will be calculated based on the potential lost revenue. This will reflect the harm to the tax system that has been caused by the tax adviser facilitating non-compliance. Potential lost revenue will usually be established by HMRC through checks into a tax adviser’s clients.

The government has decided not to pursue a penalty based on fees due to concerns about establishing the fees a tax adviser had received and the risk that fess could be disguised. A penalty based on fees would not reflect the harm done to the tax system.

The penalty will reflect the seriousness of the action by the tax adviser to facilitate non-compliance by their clients. As can be done within the existing penalty power, HMRC may reduce the penalty where a tax adviser has supported the investigation.

The government will introduce a multiplier to increase the penalty percentage for repeated actions. There will be provisions to prevent double jeopardy. Those charged a penalty will be able to seek review by HMRC of the decision and appeal the decision to the Tribunal.

The government will consider if further changes to the penalty are needed once the outcome of the Behavioural penalties reform consultation is known.

The government wants to work with professional bodies to further assist them in dealing with poor conduct from their members at the earliest opportunity. The government will therefore work with them to broaden disclosure of HMRC’s concerns to them.

The government will introduce legislation to allow for the publication of the details of tax advisers who are found to facilitate non-compliance. It will provide guidance to confirm whose details will be published, and at what stage of investigation.

The government agrees with respondents that the proposals outlined will not be appropriate in all cases. HMRC has many other sanctions available to tackle tax advisers who facilitate non-compliance. In addition to the proposals in this consultation, HMRC has published a review of existing powers and policies to tackle poor tax adviser behaviour. HMRC is also introducing registration for tax advisers from April 2026 which will provide further sanction options.

Where a tax adviser has criminally facilitated tax evasion, HMRC can consider using the Corporate Criminal Offences powers in Finance Act 2012. The government is not introducing new criminal sanctions at this time.

4. Next steps

Many respondents provided detailed and considered feedback on all proposed enhancement of powers posed in the consultation document. The government is grateful to all respondents who contributed their time and expertise. HMRC will continue to draw on responses to inform any future reforms across these policy areas.

The government will publish the draft legislation for technical consultation shortly. This will test if the draft legislation meets the stated policy objectives, and whether the legislation is clear. The intention is to include the legislation in Finance Bill 2025 to 2026.

The government remains committed to working collaboratively with the adviser community to strengthen compliance while maintaining fairness and public confidence in the tax system. The government is committed to working closely with taxpayers and advisers to ensure they are consulted as policy reforms are designed and delivered.

Annex A: List of stakeholders consulted

The government is grateful to the 2 individuals and following organisations who responded to this call for evidence:

• 11 Elements
• Association of Accounting Technicians (AAT)
• Association of Chartered Certified Accountants (ACCA)
• AJ Bell
• ATB Accountancy Services Ltd
• Association of Taxation Technicians (ATT)
• AccTax Services Ltd
• Accountech
• Addleshaw Goddard LLP
• Advice NI
• Aldon Accounting
• Anthony G Jones and Company
• Ashworth Treasure
• Avalon Tax Ltd
• Ayming UK
• BDO Accountancy and Business advice
• Bioindustry Association (BIA)
• Balancing the Books Ltd
• Beltons Public Accountants Ltd
• Bonham and brook
• Chartered Institute of Management Accountants (CIMA)
• Chartered Institute of Payroll, Pensions and Reward Professionals (CIPP)
• CLCK Bookkeeping — Taxation
• Certified Public Accountants Association (CPAA)
• Capita
• Carrington Group
• City of London Law Society (CLLS)
• Crane & Johnston
• Creative Tax Reliefs Limited
• DWF — Global legal services
• Deloitte LLP
• Drive Business Services Ltd
• EAG Tax Advisory Services Ltd
• EY accounting
• Equilibrium Accountants
• Financial Conduct Authority (FCA)
• Freelancer and contractor services association (FCSA)
• Federation of Small Businesses (FSB)
• Forbes Young
• Frevelo LLP
• Fylde Office Service Bureau LTD
• Harrison Swift
• Institute of Accountants and Bookkeepers (IAB)
• Institute of Chartered Accountants in England and Wales (ICAEW)
• Institute of Chartered Accountants of Scotland (ICAS)
• IDL-BG Accounting and Tax Services LTD
• Institute of Financial Accountants (IFA)
• International Underwriting Association (IUA)
• Ivy Tax Consultants Ltd
• Jellyfish Payroll limited
• KPMG
• Low Incomes Tax Reform Group (LITRG)
• Law Society of England and Wales
• Low Incomes Tax Reform Group
• Law Society of Scotland (LSS)
• MGMT Accounting Ltd
• Moore Kingston Smith LLP
• Pentlands Accountants and Advisors Limited
• PricewaterhouseCoopers LLP
• Professional Passport
• PropertyMark
• R&D Tax Credits
• RD Reliance Ltd
• RSM UK Tax
• RSZ Accountancy Ltd
• Rabbam Limited
• Society of Trust and Estate Practitioners (STEP)
• Salhan Accountants Limited
• Select Accountants Limited
• Sheila Barnes Accountancy Services
• Simon & Co Accountancy Ltd
• Slaughter and May
• Source Advisors
• Stream Deep Limited
• System Holdings Limited
• TC Group Nottingham
• Tax Research Network
• TaxAid and Tax Help for Older People
• TaxTek
• TaxWatch
• Taxation Disciplinary Board
• The Charity council
• The Bar Council
• Tim Phillips & Co Ltd
• University of Nottingham
• Wong Lange Ltd

Annex B: List of consultation questions

Question 1: Do you agree that HMRCs powers to tackle tax advisors who harm the tax system could be more effective?

Question 2: Do you agree with the government’s aim that any enhanced powers should allow for swift, effective, and proportionate action in cases of tax adviser activities that result in harm to the tax system and facilitates non-compliance?

Question 3: What actions that lead to harm being done to the tax system should be within scope of the proposals outlined within this consultation?

Question 4: Do you have any other suggestions for how HMRC might enhance its powers to tackle non-compliance facilitated by tax advisers?

Question 5: Do you have any comments on the proposed scope?

Question 6: Are there any other groups HMRC should consider?

Question 7: Do you agree that it should be easier for HMRC to obtain information from tax advisers where HMRC reasonably suspects the tax adviser’s activity has facilitated an inaccuracy in a taxpayer’s document or return?

Question 8: Do you believe that ‘reasonable suspicion’ is the right threshold to issue a conduct and information notice? Are there any alternatives HMRC should consider?

Question 9: Do you agree with the proposed changes to the powers to gather information from tax advisers?

Question 10: Do you have any comments about the proposal to remove the safeguard requiring tribunal approval for a file access notice?

Question 11: Are any other changes to safeguards needed to ensure Schedule 38 can be used more swiftly and effectively?

Question 12: Are there any unintended consequences of the proposed changes?

Question 13: Are there additional/alternative ways HMRC should gather information related to tax advisers who cause harm to the tax system?

Question 14: Do you believe that the current penalties under Schedule 38 Finance Act 2012, Tax Agents: Dishonest Conduct provide an adequate deterrent against non-compliance that causes harm to the tax system?

Question 15: Do you believe that penalties should be introduced for tax advisers who have facilitated non-compliance that causes harm to the tax system?

Question 16: Should the government reassess how penalties for tax advisers are determined to enhance deterrence against non-compliance?

Question 17: Which approach do you think will be most effective to reduce tax advisers facilitating non-compliance in their client’s returns?

A. a penalty based on the potential revenue lost
B. a penalty based on the tax adviser’s fees
C. a penalty based on a business’s global turnover
D. other (please specify)

Question 18: Do you believe there should be a maximum penalty amount?

Question 19: If you believe a maximum penalty should be in place, how do you feel it should be calculated?

Question 20: Do you agree the penalty should escalate in stages, based on additional instances of facilitation of non-compliance?

Question 21: What other changes to the maximum and minimum financial penalty thresholds would be needed to ensure that a penalty charged in a case is more proportionate to the tax loss poor tax advice has caused?

Question 22: Do you agree with the government’s proposal to introduce an option to charge penalties on tax adviser business entities rather than individuals, except where it can be evidenced that the wider business was not aware of the individual tax adviser’s actions?

Question 23: What else should be considered when looking at penalties charged on tax advisers?

Question 24: Are there any reasons why HMRC should not make further non-PID disclosures to professional bodies, as well as continuing with PIDs (where appropriate)?

Question 25: What types of behaviours or activities do you consider it appropriate for HMRC to make further disclosures about?

Question 26: Do you believe that it is in the public interest for HMRC to publish more information about its activity, such as the details of tax advisers subject to a formal sanction by, or a restriction on their dealings with, HMRC?

Question 27: When considering where to set the threshold of proportionality for publication, which types of sanctions do you believe should be included, and which should be left out?

Question 28: Is the short-form and long-form approach to publication sufficiently flexible to allow HMRC to take a proportionate response to different degrees of poor tax adviser behaviour?

Question 29: What information about each tax adviser should be published, and is there anything that should not?

Question 30: For how long should details remained published and in the public domain for short-form publication, and for long-form publication?

Question 31: Which criteria for publication would set a fair and proportionate threshold for using publication?

Question 32: Do the proposed safeguards provide for a fair, proportionate, and workable publication framework?

Annex C: Overview of the proposed changes

Area	Current position	Proposed changes
Tax adviser actions that lead to non-compliance that harms the tax system	HMRC can consider using Tax Agents: Dishonest Conduct, Schedule 38 Finance Act 2012 where it has evidence that a tax adviser has behaved ‘dishonestly’.	Replace ‘dishonesty’ with ‘deliberate’ facilitation of non-compliance. The government is considering what the appropriate levers are to tackle careless behaviour by tax advisers. We would welcome views on this as part of the consultation on the draft legislation.
Notification of actions that lead to non-compliance that harms the tax system	HMRC must first issue a notice to a tax adviser telling them they have behaved dishonestly. This decision can be appealed to a tribunal. HMRC can then issue a ‘file access notice’ to request information about the tax adviser’s activities.	HMRC will notify the tax adviser of the suspected activity at the same time as requesting information about the tax adviser’s activities. HMRC will confirm the activity once information provided by the tax adviser in response to the file access notice has been reviewed.
Information powers	HMRC must obtain tribunal approval to request information via a file access notice.	HMRC can issue an information notice without tribunal approval to give tax advisers the opportunity to voluntarily comply. There are appropriate safeguards for this decision, including review by an HMRC review officer who has no previous involvement with the case, and right of appeal to the Tribunal. HMRC can obtain tribunal approval to make a formal information request where necessary.
Penalty amount	HMRC can issue a penalty between a fixed range of £5,000 and £50,000 for a tax adviser’s dishonest conduct. This decision can also be appealed to a tribunal.	Introduction of a penalty based on potential lost revenue for facilitation of non-compliance, with mitigation for cooperation available. Penalties will be increased for repeated instances of non-compliance.
Sharing information with professional bodies	HMRC can share information about an individual tax adviser with their professional body where the tax adviser’s behaviour meets professional body thresholds for formal disciplinary investigations	HMRC can report lower-level breaches of professional standards to professional bodies, to empower them to take discretionary action at an earlier stage, before those poor behaviours risk reaching disciplinary levels
Publishing information	HMRC can publish information about a tax adviser only in specific contexts (for example, anti-avoidance legislation)	HMRC can publish information about a tax adviser in relation to any sanction imposed to address poor behaviour causing harm above a set threshold.