MTAR30100 - Sanctions and safeguards: overview of HMRC's approach to sanctions
Overview
The sanctions regime for tax adviser registration has been designed to be proportionate and enforceable, supporting the policy objective of ensuring that only tax advisers who meet HMRC's registration conditions and minimum standards are able to interact with HMRC on behalf of clients.
This chapter provides guidance on the sanctions framework established by the Finance Act 2026 and HMRC’s approach to its administration. A summary of the sanctions regime is available on GOV.UK.
The framework recognises the wide range of ways in which tax advisers interact with HMRC, providing flexibility for genuine errors and giving tax advisers an ability to rectify any issues before action is taken. The framework includes safeguards for tax advisers and relevant individuals, which include rights of review and the opportunity to appeal against specified decisions. Further information on HMRC's approach to safeguards can be found in MTAR30600.
The sanctions regime aims to:
- proportionally incentivise tax advisers who wish to interact with HMRC on behalf of clients to uphold the registration conditions and act in line with the standards expected of tax advisers;
- support compliance by helping advisers improve so that they meet the required standards;
- support public trust in tax compliance by enabling HMRC to restrict access to those who do not meet the required standards;
- promote a level playing field for compliant tax advisers by preventing those who cannot meet registration requirements from gaining a competitive advantage through non-compliance;
- enable HMRC to take appropriate action where a tax adviser does not meet the standards required to act on behalf of taxpayers, including imposing consequences on tax advisers who circumvent the registration requirement.
The sanctions provisions are contained in sections 232 to 246 of the Finance Act 2026.
The term 'sanction' is used broadly but includes all the compliance powers that HMRC has at its disposal to enforce the registration requirement.
For the purposes of this guidance, sanctions include:
- suspensions of registration (MTAR30200)
- financial penalties (MTAR30400)
- ineligibility orders (MTAR30500)
- publication of details related to sanctioned tax advisers where permitted by legislation (MTAR30520)
Two types of sanctions
The sanctions framework for tax adviser registration contains two distinct types of compliance action.
Suspensions of registration are designed to prevent a tax adviser from interacting with HMRC on behalf of clients. Once a suspension takes effect, the tax adviser loses the ability to access relevant HMRC services and is prevented from undertaking interactions with HMRC that fall within scope of the registration requirement. These are covered in more detail at MTAR30200.
Financial penalties, ineligibility orders, and publication of details are prohibition measures that apply where a tax adviser or relevant individual continues to interact with HMRC on behalf of clients despite the tax adviser being unregistered or suspended. These sanctions are intended to discourage and address attempts to circumvent the registration regime after access to HMRC has already been restricted. These are covered in more detail at MTAR30400, MTAR30500, and MTAR30520.
HMRC’s approach to applying sanctions
The use of HMRC's powers is defined in law and HMRC may only apply sanctions in the circumstances set out in legislation. In exercising its powers, HMRC will act reasonably and in accordance with the statutory safeguards provided by the legislation.
The sanctions framework is intended to support compliance rather than punish genuine mistakes. Tax advisers will be given an opportunity to rectify issues or make representations before a sanction takes effect.
HMRC's approach to compliance was outlined by ministers during the Finance (No. 2) Bill (Sixth sitting):
HMRC will suspend a tax adviser only after due process, including offering opportunities to comply and a chance for the adviser to explain whether there is a good reason why they are unable to do so. HMRC will not use these powers for minor breaches. […] HMRC will always work with a tax adviser who is genuinely trying to comply, will never suspend a tax adviser when doing so would be unreasonable or disproportionate, and will always consider the nature of any potential breach and how a suspension would impact the tax adviser and their clients.
Further information can be found in column 225 of the Hansard record of the Finance (No. 2) Bill Committee proceedings.
Applying sanctions to tax advisers and relevant individuals
For the purposes of this guidance, a tax adviser is the legal entity that is required to register with HMRC under the tax adviser registration regime. See MTAR10100 for more information on the definition of a tax adviser.
Some sanctions may be applied not only to the tax adviser, but also to their relevant individuals. See MTAR20400 for more information on relevant individuals.
Relevant individuals are subject to certain registration conditions that support the registration of the tax adviser. As a result, a failure by a relevant individual to meet a registration condition may affect the tax adviser’s ability to satisfy the registration conditions and may ultimately result in the suspension of the tax adviser’s registration.
In addition, certain sanctions may be applied directly to a relevant individual. These are:
- financial penalties for prohibited interactions with HMRC;
- temporary and permanent ineligibility orders; and
- publication of information under the publication provisions.
This allows HMRC to take action where responsibility for non-compliance rests with a particular individual, rather than the tax adviser as a whole.
Depending on the circumstances, HMRC may apply sanctions to:
- the tax adviser;
- a relevant individual; or
- both the tax adviser and the relevant individual