CH176100 - Sanctionable conduct by tax advisers: Overview

This guidance explains the powers that HMRC can use if we have reasonable grounds to suspect that a tax adviser has engaged in sanctionable conduct.

A tax adviser is a person who, in the course of a business, assists other people with their tax affairs. A tax adviser may be an individual or an organisation.

Sanctionable conduct is where the tax adviser does something (or omits to do something), in the course of assisting clients with their tax affairs, with the intention of bringing about a loss of tax revenue.

When we have reasonable grounds to suspect a tax adviser is engaging in, or has engaged in sanctionable conduct, or where they have been convicted of an offence of fraud or dishonesty in relation to tax, we may issue them, or another person holding relevant documents, with a ‘file access notice’. This enables us to obtain relevant documents, so that we can determine whether the tax adviser has in fact engaged in sanctionable conduct, and if so the extent of that conduct. There are certain documents and information that we cannot request using a file access notice. The person can appeal against our issue of a file access notice, provided the notice was not pre-approved by a tribunal.

A person can be charged penalties if they fail to comply with a file access notice or if they provide inaccurate information in response to a file access notice, unless they have a reasonable excuse for the failure.

A person can be prosecuted if they conceal, destroy or otherwise dispose of material documents after we have requested it in a file access notice or where we have told them that we are likely to require that document.

If we determine that a tax adviser is engaging in, or has engaged in, sanctionable conduct, we will issue a 'conduct notice'. The conduct notice notifies the tax adviser of our determination that they have engaged in sanctionable conduct.

If we have issued a conduct notice to a tax adviser, we can charge a penalty for sanctionable conduct. The penalty is calculated based on the potential lost revenue (PLR) attributable to the tax adviser's sanctionable conduct. The maximum penalty is:

  • 70% of the PLR up to £1m for the first penalty
  • 85% of the PLR up to £5m for the second to fifth penalty
  • 100% of the PLR with no maximum amount for the sixth or subsequent penalty

The minimum penalty for sanctionable conduct is £7,500. Where the PLR cannot be determined, or where there is no PLR, the minimum penalty is used.

The penalty for sanctionable conduct is reduced if the tax adviser makes a disclosure.

If we issue a penalty of more than £7,500, we must publish details about the tax adviser.

FA12/SCH38 as amended