Government proposes compulsory PII for all tax advisers

As part of yesterday’s ‘Tax Day’ announcements, HMRC has published a new consultation proposing compulsory Professional Indemnity Insurance (PII) for unregulated accountants and tax advisers who currently make up a third of the sector.

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Rozi Jones
24th March 2021
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"Doctors, nurses and solicitors have long been required by law to belong to a professional body, why not accountants and tax advisers?"

In its consultation, the government said "there is a minority of incompetent, unprofessional and malicious advisers whose activities harm their clients, reduce public revenue, and undermine the functioning of the tax advice market".

Solicitors and independent financial advisers must have PII, but it is not currently required for tax advisers.

The new requirement should not affect the 70% of tax advisers who are members of a professional or regulatory body, which usually require their members to hold appropriate levels of PII.

An estimated 21,000 advisers are not part of a professional body and therefore may not have PII.

HMRC says the requirement to hold PII could be a "valuable first step towards improving standards in the market".

Adam Harper, director of professional standards and policy at the Association of Accounting Technicians, commented: “It is already clear that doing nothing more than requiring unregulated tax advisers and accountants to hold PII – as has been required of professional body members for decades – is simply inadequate. It could arguably make a small improvement to the symptoms of unregulated advice but does nothing to address the causes.

“There are serious tax evasion and money laundering consequences of having so many unregulated accountants and tax advisers; and there are frequent horror stories of mistakes and poor advice that can leave taxpayers with unnecessary fines, penalties and tax liabilities. The unregulated are also costing the Exchequer hundreds of millions of pounds a year.

“If the government is serious about tackling this problem, it needs to make professional body membership compulsory for anyone providing paid for tax and accountancy services. Doctors, nurses and solicitors have long been required by law to belong to a professional body, why not accountants and tax advisers?”

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