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Man tired on top of a pile of books AccountingWEB Beyond the books: Accountants oppose mandatory memberships and exams
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Accountants oppose mandatory memberships and exams

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With the government launching a consultation proposing that tax advisers should be members of a professional body, accountants argue that being qualified by experience should be enough.

26th Mar 2024
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The government has issued a consultation, aiming to regulate tax practitioners by strengthening the regulatory framework and improving registration. 

Steven Pinhey, technical officer of the Association of Taxation Technicians (ATT) examined the consultation’s details, looking at whether tax practitioners should be required to register with HMRC and become a member of a professional body.

Alongside this, AccountingWEB’s editorial director Joanne Birtwistle reported on the HMRC Spring Budget Panel session at the Festival of Accounting & Bookkeeping (FAB), where Rob Jones, HMRC intermediaries director offered some insights into the consultation. 

However, the reaction of the AccountingWEB community was mostly negative with many accountants disagreeing with the idea that tax advisers should have to join a professional body.

Paul Aplin’s comment at FAB was: “I think if anyone’s qualified by experience [QBE], they should be able to pass an exam to prove it,” led to further disagreements that their experience alone should be enough. 

It’s just a box-ticking exercise 

Some of the AccountingWEB community expressed concerns over the reasons behind this consultation and suggested that joining a professional body may not even lead to better outcomes for practitioners or their clients. 

One member Trethi Leg said, “If tax practitioners are regulated then the last thing the regulators will look at is the quality of services they provide. Current regulatory bodies are only interested in box-ticking – eg do you have professional indemnity or where is your anti-money laundering [AML] system?”

This was agreed with by regular commenter, Memyself-eye who was previously a member of a professional body and felt like there was no support or guidance for their business. “When I was ‘affiliated’ to a professional body I found that they were more interested in fees and compliance (box-ticking) than my business. They were fixated on fixed costs versus variable cost calculations more attuned to factory production (remember those?) which had no relevance to my practice,” they said.

Being QBE is enough 

Those with years of experience found it frustrating that they could be made to join a professional body, believing their experience should be valued over qualifications.

MalcomB wrote, “As a so-called ‘unqualified’ tax practitioner (with 50 years’ experience working in tax), to insist that everyone must hold a professional qualification is unfair to those, like me, who would not be prevented from doing such work in an accountancy firm but would be prevented doing the same work on our own account.”

This was further echoed by member OldLag who commented, “I pride myself on my professionalism, and service to clients. I’d be happy to be scored against any other sole practice (or indeed large firm), by whatever method HMRC chose. Any forced membership would raise my reasonable fees, and probably lead to a well-deserved retirement.”

The AccountingWEB community continued to raise questions about the fairness and effectiveness of regulatory measures that could potentially exclude experienced professionals from the industry.

GHarr497688 said, “I had an AML visit last year and was told by HMRC that my records were the best they had seen. Given that I ran my own accountancy business for years and have worked in the sector for 40 years, plus I had full PI insurance, how on earth could anyone be justified to close my business down simply because I am not qualified?”

It won’t guarantee a rise in standards 

AWEB user, Paul Morton said that making all tax advisers a member of a professional body won’t even guarantee a raise in standards. 

 “In all walks of life, there are good and bad and the same applies to accountants and tax advisers whether they’re a member of a professional body or not. I did investigation work for HMRC for over 30 years, both civil and criminal. I encountered accountants and tax advisers who ranged from superb to the other end of the spectrum – incompetent and fraudulent. Some were members of a professional body, some were not,” he said. 

Morton continued, “What good was a professional body? None at all. Bringing in a professional body for all will not solve the issue unless it has real teeth, which will cost money. As others have said, it’s a box-ticking exercise that will look good in front of a parliamentary committee.”

This challenges the government’s assumption that professional bodies ensure high standards within the industry and questions whether this would be an effective solution to address issues of standards. 

No to exams 

Following the consultation and Paul Aplin's endorsement of exams, QBE tax advisers raised concerns about the possibility of mandatory examinations.

Metaller76 took to Any Answers to query this. They wrote, “Enforcing exams on circa 25,000 trading QBEs seems excessive if that is in any way the plan. Many, like me, will be middle-aged or older and not have the ability to study and work and ‘do life’. It would be a dramatic change of criteria to practice.”

Many agreed, arguing against having to retake exams after years of experience, as well as questioning how exams would accurately assess tax advisers across various specialisations. 

Regular commenter, Ireallyshouldknowthisbut said, “While in theory the exam entry idea is sound, the issue is an exam in what? Given the range of specialisms, I could quite easily fail an exam if it concentrated on areas I don’t deal with, such as audits. It would be very hard to design an exam that essentially good practitioners can pass, and the cowboys can’t.”

Paul Morton also questioned this and wrote, “Any exam for those QBEs would therefore need to be tailored to what they undertake in their day-to-day work. If this isn’t done it will drive many competent tax advisers out of business.”

What are your thoughts on this? Do you agree or disagree with the government’s consultation to raise standards in the tax advice market? Let us know in the comments below. 

Replies (23)

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By FactChecker
26th Mar 2024 19:15

I was in a meeting yesterday, with attendees from 4 of the largest PBs, covering other topics but this came up - and not one of them was in favour of HMRC's proposal.
To be clear: these were not pronouncements of official policy - but the opinions of highly respected practitioners who were there to represent their employers across the other discussions.

As with so much that emanates from HMRC (or indeed the Govt) nowadays, the overarching objective is clear and laudable - but both the practicality and relevance of the proposals is at best improbable and unclear.
It's time to stop 'making statements' as an alternative to actually 'enabling change' ... even if (as I believe it does) that requires a deconstruction of HMRC and its honchos, followed by a new start!

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By Refs1
26th Mar 2024 20:19

Smart move with MTD coming in etc., the profession needs stability not changes.

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By PK Busness Services
27th Mar 2024 09:49

Professional membership

I am a qualified AAT accountant
Whom decided many years ago to revoke his membership due to demands from AAT for CPD
Which I saw as just a cash cow for the AAT

I have worked in accountancy for over 35 years mostly in practise
I have my own practise for almost 20 years started from scratch to over 150 clients

Of course if this does actually happen or looks like it will happen
I shall be forced to pursue my membership back into the AAT

But in all fairness just because you’re professionally qualified
It doesn’t guarantee quality
Just take a look a the audit market (especially the big four)

How many times have they been in the news for shoddy work ??

CARRILION
ENRON (yes I know this was in the USA) but it forced Arthur Andersen out of business in the UK as well as US

Two of the biggest corporate frauds ever committed and the auditors didn’t see anything wrong

But HMRC seem to believe that only qualified personnel should be representing clients
Well sadly my clients will be without an accountant as I have made my niche to be to act for clients
Who the larger firms locally don’t want to act for

Or is that really what HMRC wants ??

Squeeze the little people out of self employments and their agents out of the profession
or to put us back in our place as mere slaves for corporates

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Replying to PK Busness Services:
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By norstar
27th Mar 2024 10:47

But what happens if you stop doing good work? Or go rogue? Who regulates you to stop that happening and intervene if you refuse to help the client or the new incoming accountant?

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Replying to norstar:
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By justsotax
02nd Apr 2024 10:59

you think regulation is the silver bullet? It works a treat in the water industry.....we seem to have a lot of tax barristers who put their voice behind tax evasion.....and i can see that independent viewing of MP salaries is just a blast.....at least in our sphere of work an individual has plenty of choice.....regulation assumes a sense of quality and recourse.....in these days I beg to differ.....

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By norstar
27th Mar 2024 10:46

People are missing the point with the usual "there are plenty of terrible regulated accountants and I'm QBE for 30 yrs" etc.

It's about regulation and protection. I've had several clients recently where the last accountant couldn't be bothered to supply any handover info, no webfiling codes, no info about CapAllowances, no schedules etc. I logged into Quickbooks for one guy and there were spurious balances of over £20k that had been journalled in. The director had no idea why. The accountant didn't answer any letters calls or emails and disappeared.

Then there's another one where it emerged that he was filing tax returns without even showing them to the client. As he was an unregulated "Consultant" to an ICAEW firm, they didn't want to know and neither did HMRC, who in theory regulate under the AML regs.

At least if either of these accountants had been regulated, the client would be able to get their professional body to lean on them and sort it out. But no. Because they decided not to bother to join a professional association, there's no-one to regulate them. Meanwhile any criticism of the status quo gets met with the usual "there's plenty of brilliant unqualified accountants out there"!

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Replying to norstar:
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By HL86
03rd Apr 2024 22:25

We have plenty of professional clearance letters to chartered accountants that go unanswered or minimal information provided with no follow up if things are wrong, including a bank account not balanced to the actual year end.! Complaining has had no affect to date.

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By Michael Davies
27th Mar 2024 10:54

If you are not a member of a “professional “ body ,don’t you have to be registered for AML with HMRC anyway ?

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By Paul Crowley
27th Mar 2024 11:03

Are memories that short?
When audit regulation started those that were auditing at the time were permitted to continue. Companies were not allowed to audit themselves.
If tax can be dealt with by unregulated taxpayers then what exactly is the point of regulating those that help them.
Tax avoison schemes are sold by regulated advisors and supported by tax barristers.
Better that HMRC get those schemes (do I mean scams?) shut down quickly.
All regulated and qualified advisors have employees that can exceed their knowledge.
HMRC already regulate those without membership. All that matters is that all advisors are regulated and have insurance.

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stonks
By WinterDragon
27th Mar 2024 11:06

The underlying theme in a lot of the responses from those of us that oppose the changes is that there is a lack of confidence that the process will result in any material benefit. I'd challenge Paul Aplin's take on exams that the exam isn't the problem. No QBE accountant (or resigned member of a PB) is worried about being unable to bass a basic competence exam. This line of debate will just become a [***] for tat that PB members should also pass an exam each year to prove they are still competent. Keeping a CPD diary doesn't exactly prove that you remembered anything if you had slept through a webinar or spent all of FAB drinking in the concourse of the NEC.

Dan Neidle pointed out at FAB that cowboy firms like LT4L and Property 118 are made up of ICAEW/[Insert PB of choice] members along with regulated solicitors and FCA regulated mortgage brokers. Being signed up to a prestigious club doesn't stop you from selling nonsense schemes that don't work and then running away to Malta.

Limiting shoddy agents access to HMRC services is a probably a better short-term way of tackling some of the problem but, again, commenters have rightly pointed out that HMRC have lost the confidence of agents/taxpayers and they have their own standards problems that require fixing.

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By Homeworker
27th Mar 2024 11:15

I worked for HMRC then accounting firms before starting my own business in 1996. I do have a tax qualification and am a member of my professional body but having worked in tax for more than 50 years now consider myself qualified primarily by experience. When I worked for a large firm of accountants, one of the partners (Chartered or certified, not sure which now) was absolutely useless at dealing with tax and had zero interest in keeping up to date, so relied on the tax department to keep the clients happy.
At the end of the day it makes no difference at all whether you are a member of a professional body but how much effort you make in keeping up to date with the constant changes to the tax regime. That is down to the individual concerned. I like to think that I have been pretty good at that over the years and have had many thanks from my clients for looking after their tax affairs but that has all been the result of my reading all the tax articles I could find and attending local or online courses wherever possible, so that I could provide the best service I could.

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By cfield
27th Mar 2024 11:47

Speaking from experience, I think most accountants get into tax advice as a by-product of our bread and butter compliance work, as we all need to do VAT returns, self-assessments and corporation tax returns. Consequently, we grow into it but don't all bother to take the professional tax exams as a) the work comes in anyway, and b) there are yet more fees to pay and hoops to jump through. The accountancy work is the other way round as we only became accountants in the first place through taking exams early in our careers, often at the behest of our employers, gradually passing them as the years went by and starting up our own practices off the back of that.

Hence, you get a lot more QBE people in tax who are very knowledgeable as opposed to accountancy where anyone can specialise in say personal tax or VAT without really needing to know all that much about, say, double-entry book-keeping. Also, the drive towards MTD encourages QBE growth via the software companies, who are always looking for accountants, qualified or not, to promote their products.

Whether you are qualified or not, however, you must never take on work, tax or otherwise, where your feet don't touch the bottom, at least not without doing a hell of a lot of research first and being mindful of your limitations and the knowledge required to do the job. This is where the Government policies fall down, as it ignores that basic premise and assumes membership of a professional body is the "be all and end all" of regulation. It is a sledgehammer to crack a nut and will only succeed in driving good agents out of the profession whilst driving the lousy ones into a sort of black market for tax advice. That's because the tax exams are very complex and even good agents might fail them if they don't bone up on some very esoteric and rarely encountered subjects.

A more useful approach might be to break the tax market down into digestible chunks, with some simplified online tests that agents must pass to attain HMRC accreditation. Rather than simply being qualified or unqualified, you would be accredited in certain areas, such as 60 day CGT returns, the Land & Property pages in a Self Assessment or IHT400 returns. That way, you could improve the quality of tax advice without requiring expensive professional memberships and months/years of study. That might sound like complicating it even more, but if they can design these online tests as simply, cheaply and securely as possible, we could replace the sledgehammer with a scalpel. Agents would be incentivised to gain as much accreditation as possible, either immediately or as and when the need arises, rather than being resentfully forced into yet more bureaucracy.

The main focus then would be on making sure agents stick to their areas of expertise. No need for heavy-handed box-ticking exercises. Let the market do the work. Make each agent include their HMRC accreditations with their engagement letters and advertising. Get each firm to do a simple annual return showing how much income and how many clients come from each area of expertise. Obviously that would entail a lot more record-keeping, but not as bad as having to be professionally qualified or being forced to spend ages on long and rather pointless monitoring exercises.

No doubt this is over-simplistic in many ways, but it's along the right lines I think, and better than the unimaginative approach inevitably proposed by the Government.

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Replying to cfield:
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By FactChecker
27th Mar 2024 12:26

I'm with you on your two central points:
- the impossibility of one Qualification imparting competence across all tax advice;
- the need to (self-)recognise when a practitioner is about to get out of their depth.

But less convinced by your suggestion of "some simplified online tests that agents must pass to attain HMRC accreditation".
If simple then they'll still not fully address your (and my) two core concerns .. as the client will assume that sphere is *fully* covered for all the weird eventualities that we see so often being raised on Any Answers.
And if not that simple, then someone has to fund the creation of a comprehensive suite of tests and maintain (or at least review) them every year - and I don't see HMRC volunteering (or a bunch of happy QBEs if it's run by HMRC)!

But more cynically, how long do you think it would take for 'suppliers' to spring up - who either sell you an answers-pack or, more likely, offer to sit the test for you?

There is definitely a problem (albeit not specifically the same as what HMRC perceive) ... but my brain isn't generating solutions right now!

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Replying to FactChecker:
By cfield
27th Mar 2024 13:23

I don't think anyone could design simple tests that would cover all the weird and wonderful situations we see on here, but they could still have tests at different levels that would address these complexities.

As for client expectations, that could be managed by an information campaign and a requirement for agents to display their credentials. HMRC could send out agent authorisation codes with details of their level of expertise, say Level 2 of 5 with descriptions such as basic, moderate, advanced.

The tests would have to be set each year by the professional bodies. It shouldn't cost that much to devise simple tests capable of showing whether an agent knows their onions. There would have to be a suite of them with random selections so the questions weren't too predictable, with answers that can't be memorised and that require some analysis of the data.

I'm less convinced about the risk of rogue test-takers undermining the system. Online tests are fairly common in other fields like IT and they seem to avoid that problem. We just need proper security. Lastly, there would need to be time limits on the tests and restrictions on the number of times each year they can be taken.

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7om
By Tom 7000
27th Mar 2024 12:20

True Story

The bloke who was the forklift driver in the warehouse where I was FD, rocked up in my office one day. Said I have been advertising as an accountant and I have got my first tax return to do. I have no idea what to do it just seemed like easy money. Can you tell me what I do please....

The answer should have been have you passed HMRCs test of tax return competence ? if so which modules did you do
Income tax
CGT
VAT
corporation tax
International tax

If the answer is none,.... well legally you are not allowed to do them.

I mean you cant just rock up and remove an owls gaul bladder, if you are not a vet... whats the difference?

It was what actually inspired me to start my practice as I thought if this joker can convice someone he can do tax returns..... and I an ACA....

The rest is history...

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Replying to Tom 7000:
By cfield
27th Mar 2024 13:04

It should have had the opposite effect. You should have thought, "If people like this are doing them, soon the market will be saturated and there will be no money in it".

Fortunately there is, just about, so I'm sure your fork lift truck driver must be in a tiny minority. Having said that, there are some well known tax return outfits who charge ridiculously low fees for a job that should require some expert knowledge, if not as much as a fully fledged tax professional. I'm pretty sure they don't ask too many pertinent questions. That would make it too time-consuming for them to turn a worthwhile profit.

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By [email protected]
27th Mar 2024 12:41

Every Finance Act seems only to add to the level of tax complexity making it impossible for many to navigate the law and procedures effectively. This is a burden on the whole economy.
The answer surely is to simplify the tax system so that more taxpayers can deal effectively with their own affairs. The benefits for them would be less time away from managing their businesses and less compliance costs. For HMRC there would be fewer people to worry about regulating and less checking at their end. Ideally only complex case would need tax advisers. This would shrink the size of the current problem.

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By Nick Graves
27th Mar 2024 12:50

In response to this totalitarian overreach, I would question as to whether the Government (largely Qualified By Ineptitude) is in any position to come around here, shouting the odds?

My reply to such a 'consultation':

You are responsible for HMRC - sort out your own bloody messes, before interfering with ours.

[drops mic]

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By wblewis
27th Mar 2024 14:07

Another side to the question, can we be assured that HMRC staff that advise taxpayers are suitably qualified?

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By wblewis
27th Mar 2024 14:07

Another side to the question, can we be assured that HMRC staff that advise taxpayers are suitably qualified?

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By GHarr497688
27th Mar 2024 17:02

The Government want the Accountants to police the tax system to save costs. Unfortunately HMRC have little knowledge of what we actually do Amy they think regulations will solve the uncertainty of outsourcing the tax system . We all know that .

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By GSWB1954
27th Mar 2024 20:57

HMRC should be regulating themselves. A lot of my time nowadays is spent troubleshooting problems caused by the ineffectiveness of HMRC. 48 working days to process a VAT registration application. God knows how many months to answer a letter. 45+ minutes to answer the phone (where did they get an average wait time of 16 minutes?). Hammer to crack a nut when it comes to AML compliance. A ridiculously complex tax system. And now we are going to have to file 4 times a year. Get your own house in order HMRC.

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By Vaishali
29th Mar 2024 19:38

Hmrc is trying to regulate all agents be either tax advisors or practioners. But to be honest I dont see how they are improving their services! They close off lines for self assessments, VAT helplines are open only 5 days in a month and pointing everyone to use online help tools is a joke. How can a computer solve some very specific problems. Who is regulating the HMRC. Just because they collect tax, does not give them powers to shuffle systems where costs for us agents and tax advisors will potentillay increase whilst they are not practicing what they preach. HMRC has useless staff on calls who at multiple times do the opposite of what I have requested and that too after waiting for over 45 minutes on call. Yet HMRC thinks they are regulatig the accounting and tax profession by planning to get everyone to be part of a professional body. AML with HMRC alone is £300 a year fee!! Now asking people who have had years of experience to sit an exam is a matter to be challenged. Someone need to challenge the tax collector'HMRC' about their services, and there is a long list of things which people will have to complain about(forget agents, but the general public)

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