CH176150 - Sanctionable conduct by tax advisers: Legislation
The legislation which provides the basis for HMRC’s powers to deal with sanctionable conduct by tax advisers is at Schedule 38 to the Finance Act 2012 as amended by section 250 and Schedule 22 of the Finance Act 2026.
During the passage of the Finance Act 2026, Minister made the following comments explaining the intended scope of the legislation:
[The provisions] …will ensure that HMRC can take effective action against tax advisers who intentionally seek to facilitate non-compliance in the tax affairs of their clients. The clauses also introduce a new power to allow HMRC to publish details of tax advisers who have been suspended or barred by HMRC from acting for clients where it is in the public interest to do so.
[The relevant clause] makes amendments to schedule 38 to the Finance Act 2012, which introduced powers for HMRC to gather information and sanction dishonest tax advisers. It is the Government’s view that those powers need to be strengthened. For example, the maximum penalty amount of £50,000 is a poor deterrent for rogue advisers who intentionally facilitate millions of pounds of tax loss. HMRC needs stronger and more effective powers to crack down on the small minority of bad tax advisers who cause such harm to the tax system.
The changes made by [the relevant clause] will give HMRC those stronger powers. They impose a more effective regime for HMRC to gather information from tax advisers suspected of wrongdoing and to issue penalties where appropriate. At the same time—and I know hon. Members take an interest in this—there are robust safeguards, including appeal rights, and they are being maintained to ensure the powers are applied fairly and proportionately.
Importantly, the powers will apply only to tax advisers who act with the intention of bringing about a loss of tax revenue, such as those who knowingly claim a tax repayment for a client who is not entitled to it or advise a client to deliberately enter incorrect figures on a tax return. This is, rightly, still a high threshold.
The powers will not affect advisers who act in good faith, or who take a credible view as to what the law requires of their clients, including where they use extra-statutory concessions or HMRC guidance to form that view. They also do not affect advisers who make mistakes while trying, as the vast majority do, to do the right thing. Where HMRC have reasonable grounds to suspect a tax adviser has intentionally sought to cause a tax loss, the clause gives HMRC the power to gather information about the tax adviser’s advice to their clients.
FA12/SCH38 as amended