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Compulsory PII proposed to raise tax advice standards

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The government looks to raise standards of tax advice by introducing a requirement for all advisers to hold professional indemnity insurance (PII). 

26th Mar 2021
Editor AccountingWEB
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The government looks to raise the standards of tax advice by introducing a requirement for all advisers to hold professional indemnity insurance (PII). 

A consultation into compulsory PII for all tax advisers was one of more than 30 policy updates and documents released by the government on 23 March, but experts have warned the measure is ‘inadequate’ and “no magic bullet”.

The release of the 16 week consultation follows the government’s call for evidence in raising standards in the tax profession, which found that there is “a minority of incompetent, unprofessional and malicious advisers whose activities harm their clients.. and  undermine the functioning of the tax advice market”.

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Replies (15)

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By GR
26th Mar 2021 14:43

I think HMRC should give every tax agent a code which clients can enter into a national database to double check the name of the accountancy firm, who supervises the firm for AML, whether or not any supervision has expired, PII details, principal of the firm, ICO registration number, and basic contact details, e.g. trading address, phone number, email, and website.

In addition, I think CPD should be mandatory on top of AML and PII. Surely, HMRC can produce a few multiple choice CPD questions for tax agents to complete each year to double check that they have up to date knowledge.

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By SteveHa
26th Mar 2021 15:04

Quote:
He argues that the consequence of unregulated accountants and advisers leads to “frequent horror stories” and “poor advice”.

That old chestnut again, suggesting that all unregulated are cowboys and all regulated are squeaky clean, which is not the case for either.

Personally, I'm not a member of a PB and have no formal qualifications. I have 40 years experience, 20 earned working for HMRC, and since leaving HMRC I have always been employed within regulated practices (both ACCA and ICAEW).

If the calls for all practitioners to become members of PBs are heeded, I could be one of those who fall through the cracks, find myself out of a job, and too old to learn a new trade, despite the fact that I always operate within the spirit of the legislation, and always take a very critical view of any "ideas" that are passed my way.

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Replying to SteveHa:
By jon_griffey
26th Mar 2021 16:48

That's easy to deal with - there would no doubt be grandfathering of existing unqualifieds. They can then start to weed out the cowboys. Moving forwards it is not unreasonable to require that any new accountants/tax advisers wishing to practice have a professional qualification. To be honest passing exams like AAT/ATT should be easily achievable.

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Replying to jon_griffey:
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By Paul Crowley
27th Mar 2021 13:37

Grandfathering happened when audit started to be regulated
Yet it is still the big four that bring audit into criticism

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Replying to Paul Crowley:
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By Arcadia
29th Mar 2021 18:13

Only because the big 4 do 90% of all auditing and 99% of public company auditing. If there any failures it is bound to be them. My experience when I have seen small firm audits is that they are no more than accounts preparation. Most of the 'audit' work is 'per client'. They are weakly regulated and if they do poor work they promise to do better, and get another 10 years before the next visit. Their failures are never going to make the headlines.

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Replying to SteveHa:
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By codling
29th Mar 2021 17:15

Like you, myself and my partner spent several years in the Inland Revenue (later HMRC) before leaving as actual HMIT's and moving to, different, sizable firms both in London and then the West Country. There was no compulsion to take exams with these firms so we did not, but we gained a huge amount of experience with our roles culminating as tax managers for good size practices. We started our own practice about 27 years ago and have always had PII and all other necessary insurance and are registered with ICO and with HMRC for money laundering as well as subscribing to CPD programs each year.
We would be in the same boat regarding PB's.
I must agree that PII, as a minimum, should be compulsory but there must be room to include those who are qualified by experience if regulations were taken further.
Luckily, by the time this comes around I shall have retired gracefully!

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By mbee1
26th Mar 2021 16:15

"Surely, HMRC can produce a few multiple choice CPD questions for tax agents to complete each year to double check that they have up to date knowledge"

HMRC should be the last body to produce multiple choice CPD questions. How often do they get things right!!

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Replying to mbee1:
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By Paul Crowley
27th Mar 2021 13:39

HMRC are not qualified to test knowledge of tax law
If they did then why do they lose so regularly at tribunals

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By Paul Crowley
27th Mar 2021 13:27

Anyone with a qualification of any kind has PII
Any trader in accountancy or bookkeeping with half a brain has PII
Who do HMRC really think does not have PII?

Only trader I have come across was ex HMRC VAT advisor who not surprisingly thought VAT guidance was the Law. HE was wrong and uninsured.
HMRC look to yourselves
The only bad and uninsured advisor (that I have had dealings with) came from your shoddy organisation

Where is the evidence that unregulated 'cowboys' do not have insurance?
Oh forgot. The people who are regulated by HMRC for AML
Easy make evidence of PII a condition of AML regulation. Problem gone. Impact probably zero. I bet 95% or more do actually insure. Insane not to.
So HMRC are suggesting that their own regulatory system is yet another case of unfit for purpose
Nice of HMRC to make public just how bad they are compared to the proper regulators

The real problem is not those regulated
It is the unregulated kitchen table non agents that submit by pretending to be the client
Even worse persons using honorary exclusion

Thanks (1)
Replying to Paul Crowley:
By jon_griffey
29th Mar 2021 12:49

Paul Crowley wrote:

Anyone with a qualification of any kind has PII
Any trader in accountancy or bookkeeping with half a brain has PII
Who do HMRC really think does not have PII?

You would think so, but the disciplinary orders over the years are full of accountants who operated without PI - and they are the regulated ones. It is very rare to get a PI claim and the premiums every increasing so I expect that there are vast numbers who don't bother. If you are unregulated then there is nobody to insist on it or to check.

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By Crouchy
28th Mar 2021 13:05

whilst some insurers may take the opportunity to charge the earth for insurance, how many will realistically insure practioners who are unqualified and unregulated, they will surely pose the biggest risk

Its a backdoor to getting regulated accountants, so why not just go down that road straightaway

it may raise standards, but it will also increase the black market of agents who use clients HMRC login details to complete tax returns, HMRC has no way to find or enforce anything upon those agents

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By colinstewart
29th Mar 2021 12:00

I am fed up with finding so many ASPs who just don't want to join the club. Why should they not provide PII to cover the bad advice they often give. How many times are the rest of us put in a difficult situation because some (and I include Financial Advisors) tell the client what they want to hear rather than the correct advice..... no, you can't claim CT relief on your IFA's bill for personal investment advice - even if he has put it in writing!! So, now I just report these people direct to HMRC - [email protected]. Of course those that don't want to join the club will not do so - six months inside should help with that one!

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Replying to colinstewart:
By SteveHa
30th Mar 2021 15:34

colinstewart wrote:

How many times are the rest of us put in a difficult situation because some (and I include Financial Advisors) tell the client what they want to hear rather than the correct advice.....

Conversely, I spend an awful lot of my time telling my ACCA and ICAEW employers, "No, you can't do that", and I go on to tell them why, and what they can do. It's not all a one way street.

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By North East Accountant
29th Mar 2021 12:19

And insisting on insurance will raise standards how?

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By markabacus
29th Mar 2021 18:28

Those reglated thru PB's know what they doing? Unregulated are Cowboys? Um, well the worse case I've come across in the last 17yrs or so since leaving the finance function in industry was from a PB practice, multi partner in 2013, so bad I reported thru to SOCA.
I'm not attached to a PB, HMRC re AML and a member of ICPA who amongst other things I organise my PI cover, fee protection cover for our clients, consultancy support and CPD materials. I also subscrip t other sources such as TaxTv, Tax insider etc
Not sure it's so clear as to the good, the bad and the ugly

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