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image of arrow going upwards | accountingweb | Government consults on regulating tax practitioners
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Government looks to regulate tax practitioners

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As the government launches a consultation on raising standards in the tax advice market, Steven Pinhey looks at the details and what the effects of the outcome could be.

12th Mar 2024
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On Budget day, the government issued its consultation on raising standards in the tax advice market – strengthening the regulatory framework and improving registration. 

Outside of the tax profession, many people assume that the tax advice market (and its practitioners) is already regulated in a comparable way to auditors, solicitors and independent financial advisers. 

However, as readers of AccountingWEB know only too well, this assumption is incorrect, and at present anyone can set themselves up as a tax practitioner and provide tax advice to clients for a fee with little or no oversight. The government considers that this allows “a minority of [tax] practitioners who are incompetent, unprofessional or unscrupulous” “to operate, harming their clients and the public finances”.

Perennial thorn

The question of regulation has been a perennial thorn in the side of the government for years, often being placed in the “too hard to deal with pile”. However, in his 2019 Independent Loan Charge Review, Sir Amyas Morse recommended that “the government must improve the market in tax advice” and “establish a more effective system of oversight, which may include formal regulation, for tax advisers”.

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Replies (66)

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By Trethi Teg
12th Mar 2024 14:08

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 i.e. do you have PI, where is your AML system, where are your CPD training records (which are normally made up at the last minute when a visit is scheduled) etc etc.

ICAEW inspections spend less than 5% of the time looking at client files and then do not examine the quality of work.

For those rogue and or useless tax advisors in my experience they pretend to be the client (using Govt Gateway details provided by the client) so how will they be picked up?

To demonstrate that I am not opposed to some regulation I think HMRC should certainly spend more time dealing with such things as mass repayment claim companies and similar.

Thanks (27)
Replying to Trethi Teg:
Should Be Working ... not playing with the car
By should_be_working
13th Mar 2024 09:56

This is always the way government regulation goes. Regulatory systems are usually set up so the authorities can be seen to be Doing Something, and that attitude continues through to the regulators themselves.

Add to the box-ticking mentality the inevitable picking of the low-hanging fruit (those who innocently miss a box to tick) so the regulators can so that they are Doing Something, rather than chase down the hardcore cowboys who will make sure they do everything 'right' to stay off the bureaucrats' radar.

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Replying to Trethi Teg:
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By farrcorfe
13th Mar 2024 12:12

Ah, you forgot to mention in your list of what regulatory bodies do the one important thing - charge a whopping registration fee! Just make all practitioners members of recognised professional bodies who include tax advice in members' CVs.

Thanks (5)
Replying to farrcorfe:
Should Be Working ... not playing with the car
By should_be_working
13th Mar 2024 16:20

You're absolutely right of course.

All those staff, on-costs and plush offices (which absolutely have to be in Central London because reasons) represent an essential public service that must be paid for somehow.

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By MalcomB
12th Mar 2024 15:36

As a so called 'unqualified' tax practitioner (with 50 years experience working in tax, from the HMRC to several top 20 accountancy firms (and for the last 30 years having my own client base)), I agree that there should be some tightening up of the tax advice marketplace. However, to insist that everyone must hold a professional qualification is unfair on those, like me, who would not be prevented in doing such work if we work for an accountancy firm but would be so prevented doing the same work on our own account.

I do not sell tax avoidance schemes and have at all times been honest with both my clients and the HMRC. I hold PI cover and keep up to date with the legislation and am registered for ALM with the HMRC.
I believe that people in my position should be regulated by the HMRC via the ALM registration. It would be simple for them to record on their records when they have encountered illegal or wrong advice given by my business and if they operate a points based system, it could be something like three strikes and you're out and the ALM registration is cancelled.

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Replying to MalcomB:
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By FactChecker
12th Mar 2024 16:41

Careful what you wish for in your final paragraph!

It all sounds so reasonable (and I fully endorse the need for rooting out those who are less than competent let alone those who do not feel bound by a need for honesty), but HMRC considered something like this more than 10 years ago before I (and others) managed to torpedo it.

Why?
Because the HMRC plan was to use the points system not just to hobble an agent they didn't like via refusal to accept them for AML registration ... but to simply refuse to allow them to trade as an Agent.
And then the fun started ... trying to define a clear basis on which penalties of increasing severity would be applied (all the way up to the ultimate sanction), and who would oversee/over-rule any decisions made by HMRC where necessary.

Thanks (17)
Replying to MalcomB:
the sea otter
By memyself-eye
12th Mar 2024 18:08

HMRC 'recording' when you have given illegal or wrong advice?
Simple for them?
Points based? Dream on, this isn't the premier league.
HMRC don't do three strikes and you're out- more like one slip up and you're fined!

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Replying to memyself-eye:
By Nebs
13th Mar 2024 10:45

A "three strikes and you're out" system would certainly see the HMRC helplines closed. And there would need to be a new system to replace HMRC issuing tax codes.

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Replying to Nebs:
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By johnjenkins
13th Mar 2024 10:51

"Agent Strategy".

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Replying to MalcomB:
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By chancewind
13th Mar 2024 10:53

I totally agree my circumstances are similar. Hold PI insurance, registered with HMRC for money laundering. I deal with smaller clients probably ones who would be charged a fortune by a large firm. I provide a service. I do not do tax avoidance schemes and I do not audit large firms which then go bust after being audited by one of the big Five registered firms.

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Replying to MalcomB:
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By chancewind
13th Mar 2024 11:01

I totally agree my circumstances are similar. Hold PI insurance, registered with HMRC for money laundering. I deal with smaller clients probably ones who would be charged a fortune by a large firm. I provide a service. I do not do tax avoidance schemes and I do not audit large firms which then go bust after being audited by one of the big Five registered firms.

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Replying to MalcomB:
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By OldLag
13th Mar 2024 12:06

I completely agree. I was trained by the old Inland Revenue and worked there (including HMRC) for many years. I was a fully trained Tax Inspector when I left, and quite honestly (although I have looked in the past) I am not going to subject myself to exams to qualify for something I don't need!

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 choose. Fully insured (never needed - touching wood), MLR registered, ICO registered, 33 years practical experience now. Clients are happy, HMRC are (generally, but do get politely challenged....) happy.

Any forced membership would raise my reasonable fees, and probably lead to a well deserved retirement. Maybe we should encourage the experienced people to leave?

There are rogues, and I'd force the repayment agents & dodgy umbrella company advocates out of business, but as a former HMIT I absolutely know there are good and bad - and it's nothing to do with formal membership of anything......

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By GHarr497688
12th Mar 2024 17:57

Given I worked for a Chartered Accountant for 10 years , had an AML visit last year ( for my own business) 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 on the sector for 40 year plus I had full PI insurance how on earth could anyone be justified to close my business down simply because I am not qualified ?

Thanks (14)
Replying to GHarr497688:
the sea otter
By memyself-eye
12th Mar 2024 18:09

They will find a way......
Be afraid be very afraid!
As Berliners used to say in 1945 "enjoy the war the peace will be much worse"

Spoken in German, obviously...

Thanks (9)
Replying to memyself-eye:
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By GHarr497688
13th Mar 2024 14:05

Luckily I retired on 30th November 2023.

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By johnjenkins
13th Mar 2024 09:54

I have an IFA friend who now has to have someone come in every month to make sure all is compliant.
I've known him since prior exams etc. so I ask if compliance has made a difference. The answer is as suspected no, there are still people who haven't got a clue but have passed the exams. Incidentally the compliance doesn't include checking to see if the right policy, investment has been sold. Absolute waste of time and money.

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By Paul Morton
13th Mar 2024 10:05

So this has raised its head again. 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 that ranged from superb to the other end of the spectrum, incompetent and fraudulent. Some were members of a professional body, some were not. What good was a professional body? Absolutely 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 which will look good in front of a parliamentary committee.

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By Ammie
13th Mar 2024 10:06

Better control is certainly required, but how are they to legislate for DIY taxpayers filing their own returns and accounts and think that tax and accountancy is no big deal, why all the fuss?

HMRC are stretched to breaking point to query, so there are many many DIYers filing complete rubbish and believe it to be fine because no one has said otherwise. Evidence? I am a micro practitioner and in the last year I would say I have acquired several ex DIYers who decided to use a professional not because they are unsure of their efforts but because they are too busy and don't have the time, only to fund that their work in the main has been shoddy and inaccurate and requiring complete reworking.

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By Smiffy813
13th Mar 2024 10:09

Make it similiar to the financial advice sector (not perfect, but at least there is some structure)

Full disclosure
Mandatory registration on a published register
Compliance Oversight
Annual Levy based upon activities that are conducted and the risk associated (both to the client and also the revenue)

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Replying to Smiffy813:
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By johnjenkins
13th Mar 2024 10:53

See my previous post.

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Replying to johnjenkins:
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By Smiffy813
13th Mar 2024 11:05

If your friend still 'sells' then thats part of the problem, and it sounds like he is one of the weaker advisors who still operate to a target model.

The sector is focussed upon appropriate advice - not sales. Any IFA who still 'sells' has caused the problem, and they will be rooted out at some point.

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By Ian McTernan CTA
13th Mar 2024 10:10

I wonder how much this will cost us for the privelege of yet more monitoring by HMRC, who can't even get their own house in order.

Will they weed out their own? Nope, thought not.

Just another cost to add to the ever growing pile of box ticking fees.

Thanks (10)
Roy Mitchell
By Roy3112
13th Mar 2024 10:15

I like my Doctors and Nurses to be formally qualified. The same with the pilot that flies the jet I`m in. Why should someone carrying out tax work not have any formal training? The days of QBE are gone. The writing was on the wall when they introduced AML and we had to sign up with HMRC to be supervised.

If people working in the industry already know everything they shouldn`t have any problem breezing through the ATT papers? That was my story and in my mid 60`s I took it on and my ignorance was put in a spotlight. It took two years of slog and I`m proud I did it. I now have all my Tolley course notes and the training to do the job properly. ATT also encourage their members to keep up to date with what's going on, so its far from a box ticking exercise.

There is nothing to be afraid of after all, we already work in tax don`t we.

Thanks (7)
Replying to Roy3112:
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By johnjenkins
13th Mar 2024 10:55

Are you saying that we are now not to listen to the man in the pub?

Thanks (2)
Replying to johnjenkins:
Roy Mitchell
By Roy3112
13th Mar 2024 12:48

Most of my customers seem to John when they explaining tax to me. I really didn`t know that you could reduce CT by paying a dividend. I live and learn every day. I always feel so guilty when trying to correct them!

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Replying to Roy3112:
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By johnjenkins
13th Mar 2024 13:17

Are you now telling me that a dividend payment is not an allowable expense even though wholly and exclusively?

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Replying to johnjenkins:
Roy Mitchell
By Roy3112
13th Mar 2024 13:29

Must be as I heard it in the Dog and Duck. Hang on let me refer to my course notes

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Replying to Roy3112:
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By johnjenkins
13th Mar 2024 13:47

I'm glad you're in The Chair.

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Replying to johnjenkins:
the sea otter
By memyself-eye
13th Mar 2024 18:09

Please god no - I do... err... did some of my best work in the pub!

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Replying to memyself-eye:
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By johnjenkins
14th Mar 2024 09:18

Don't we all!!!!

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By petestar1969
13th Mar 2024 10:16

This is, of course, a great idea.

It should be extended to those companies touting portals to allow accountants to help clients obtain finance. Those companies that trash clients credit ratings then offer a "reasonably priced" service to repair said credit ratings. *cough Capitalise.com cough*

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By mydoghasfleas
13th Mar 2024 10:35

"who are incompetent, unprofessional or unscrupulous” “to operate, harming their clients and the public finance".

You could just as easily precede it with "HMRC". I would not because HMRC is singular, so it would be, "which is", not "who are" and of course the old customer client thing.

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By Self-Employed and Happy
13th Mar 2024 10:37

Make Accountant a protected word alongside Surveyor, Solicitor and Doctor. Only companies / people holding a Practising Certificate with ICAEW / ACCA.

I completely understand there are good and bad apples qualified and non-qualified, but at least you are starting from a position where all accountants have displayed via their qualification they have a minimum level of knowledge, again I re-iterate this does not guarantee good service etc but it's a starting block in which to build from.

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Replying to Self-Employed and Happy:
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By CHancott
13th Mar 2024 13:04

Don't forget CIMA!

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Replying to CHancott:
the sea otter
By memyself-eye
13th Mar 2024 18:10

and CAMRA.

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Replying to CHancott:
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By dmmarler
14th Mar 2024 08:06

and CGI. The real problem with some bodies is to work out what the syllabus was when the individuals took their professional examinations, and the standard to which they were examined. I have been quite entertained over the years by people who have qualified with various professional bodies but have serious gaps in their knowledge which would have been examined at some point. And what to do re those who took ATII in the distant past and failed one module, or those to got an FTII by just submitting a dissertation?

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By CHancott
13th Mar 2024 10:38

They are starting with tax advisors but I don't think it will end there...I wonder if in 20 years we will look back at this time and laugh at when anybody used to be able to call themselves an accountant/bookkeeper/tax advisor.

Doctors and nurses, solicitors, financial advisors, surveyors - they are all protected terms so why isn't accountant/bookkeeper and tax advisor.

Virtual assistants offering bookkeeping services, so called accountants who's only experience is doing the bookkeeping for the family business, and tax advisors who have routinely run into problems with HMRC but continue to sell the same schemes. it's within our interests to block these types of so called professionals competing with us and giving the industry a bad name.

I'm not sure professional membership of an accounting body is necessary or any better. The amount of times I have met fully qualified accountants who are absolutely useless and you wonder how they ever passed an exam. One ACCA accountant who told me "you should claim 20% VAT on every invoice because we charge VAT on every invoice".

Some form of competency assessment that includes your work experience is more relevant.

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By wblewis
13th Mar 2024 10:41

So typical of HMRC's pass the buck mentality. The real problem is the ridiculous complexity of tax laws and the inability of HMRC to interact with the average taxpayer. Solve these problems first and recognise that registration will not rid us of the bad advisers.

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By Ralphgab
13th Mar 2024 10:47

I have said this before, I should have kept a copy of my previous reply to save time. I am one of those unqualified accountants and have operated since I left HM Customs & Excise in 1980. During that time I have worked for 3 firms of accountants, 2 ICAEW and one ACCA. Frankly I was appalled by the standard of accounts produced and errors by the second ICAEW firm. All focus was on getting something done that looked reasonable and a bill sent out. I was sacked within 12 months I think because I embarrassed the boss by asking clients about debtors and creditors when they hadn't previously been included in accounts. At the time the VAT flat rate enabled contractors to add to profits. On doing the accounts for 2 such contractors we found VAT underdeclared of £8k for one and over £10k for the other. We were instructed to say nothing but add a quarter of the underdeclaration to the following 4 returns. One of the contractors took 3 months off and then asked why he still had VAT to pay, oops! The £10k should, of course, have been notified to HMRC. When I left I took a list of errors which included £30k dividend omitted from a client's return, discovered when he went elsewhere. Shortly after I left he had a compliance visit from the ICAEW who found nothing wrong, so that was a waste of time! We took a client from a large ICAEW firm. The client was involved with Construction industry training through colleges and to the trade; i.e VAT partially exempt. Looking at the filed returns I could see no input tax restriction, so I contacted the accountants asking if de Minimis calculations had be done to be told that"the client hadn't asked for them to be done". We took a B&B business from another firm and they showed Premises £340k on the balance sheet. I asked for details of the purchase and it was Premises £200k, Goodwill £100k, and £40k for Fixtures, fittings and equipment, making a difference to the CA claim. I could cite more but I need to do some work!
Aware of my lack of qualifications. I signed up with CIOT in 2015 to qualify in Cross Border (EU) VAT. I passed the first exam but then some idiot decided to hold a refendum.
My points are:
1.In my experience the ICAEW does not enforce high standards.
2. We have been registered as agents with HMRC for decades now, and have to be to act for clients so why the question?
3 No doubt any change will result in more unecessary cost on a par with MLR.

Thanks (1)
Replying to Ralphgab:
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By petestar1969
13th Mar 2024 11:56

I have worked at accountancy firms like the one you describe.

I have been told things like..

Stop looking for problems, they never asked us to do that (shouldn't we have offered?), don't tell him that because then he'll know we messed it up last time. I, like you, could go on but time is limited.

I have witnessed many partners adjustments, aka fiddles, of accounts.

Things like, oh insurance is too high this year because it was missing last year as the numpties doing it got it wrong, lets put the adjustment in purchases so the client doesn't notice/ask.

And, oh lets put all the restaurant bills in purchases, we know its entertaining but lets hide it.

You get the idea.

Yes, proper regulation may not catch all the cretins out but it will get enough to make it worth while.

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By leekris
13th Mar 2024 10:56

So someone can do their own self-assessment return submitting any old rubbish with almost nil chance of HMRC asking any questions.

But using a QBE who will almost always have the skill, knowledge and ethical standard to submit accurate and compliant returns must be stopped.

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By moneymanager
13th Mar 2024 11:00

At the turn of the 19th century, the US had a highly diverse medical system, there were colleges but no inhibitions on such as chiropracty, osteopathy, other methods too numerous to name, then along came the Flexner Report which was wholly funded by Rockerfeller and which concluded that medical training was poor, standards inadequate, with patients exposed to poor and delitirious treatments, government was pressured for "regulation' to raise standards, it created an industrial cartel of professional bodies and its authorised orthodoxy and today's disastrous outcomes in the world's most expensive system; as Ian Fldmmkngvwrote 'Once is happenstance,twice is a coincidence, three times it's enemy action'.

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By anthonystorey
13th Mar 2024 11:24

The truth is that HMRC just want to get rid of all tax advisors which is one of their stated aims for MTD (see para 14 "2 HMRC’s expectations and engagement with stakeholders" from the last public accounts committee). The full report is at -https://publications.parliament.uk/pa/cm5803/cmselect/cmpubacc/1333/repo...

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By AndrewV12
13th Mar 2024 11:37

What the consultation covers
The consultation seeks views on:

whether tax practitioners (within the consultation this refers to “any professional providing tax advice and services”) should be required to register with HMRC to be able to interact with the department on behalf of their clients, and
three approaches to strengthening the regulatory framework, one of which is mandating membership of a recognised professional body that supervises tax practitioner standards.

If it drives out the cowboys/chancers I am all for it.

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Replying to AndrewV12:
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By moneymanager
13th Mar 2024 17:46

"cowboys, chancers', and innovators who actually understand the legislation

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By MikeyMad
13th Mar 2024 12:00

those affected by using Apostle Accounting and the tax rebate scandal wish this was in place years ago I am sure........

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By JackH
13th Mar 2024 12:05

There is far too much interference by HMG and HMRC in what is a solidly private sector of the service economy. I retired in 2019 because I had had enough of regulation (by my 3 pusillanimous, sychophantic, self-serving "professional" bodies, strong-armed by The Establishment or enticed into their inner sanctum by funny handshakes and the honours list) plus OTT AML and the spiralling cost of compulsory PI cover (despite my never having had a claim in 50 years). I celebrated on Retirement Day by telling all three to insert their qualifications, although hard-earned by me, in their orifice of choice. You cannot take Bermondsey out of The Boy!

The mendacious pretext for this relentless Quango Empire Building and virtue-signalling is always protection of The Public. Any actual interest in the individual members thereof is vestigial, as witness the constant shifting of tax compliance costs from the Exchequer to them and to those decent advisers trying to help them comply, within their limited ability to pay reasonable fees. For example, they may have to pay a fair charge, say, £400 to register a trust on TRS (or pay a penalty of £5000!) which is as far removed from The Targeted Mischief as a Quasar in Outer Space. Like an express trust of £100 held by A and B on a bare trust for A B and C, which is not Excluded. This is comparable to shining a flashlight up the backsides of A B and C in order to verify that no money launderer or sanctions buster is hiding out up there. Xi Jingping would approve of this mass surveillance, without even an reward of compensation by an increased social credit score

Now I am retired I am not eligible to join the Agents' Forum. So my daughter has filed a 64-8 nominating me and saying that we both have a "legitimate expectation" that I will not be discriminated against and forced to consult the HMRC ignoramuses on the Customers' Forum, where a typical answer to a CGT query is, I kid you not,"Please see TCGA 1992".

Who do these arrogant civil servants, WFH (raucous laughter off) and paid by our taxes, actually think they are?

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By listerramjet
13th Mar 2024 12:10

This is one of the most cak-handed initiatives in a long list of cak-handed initiatives coming out of government. Surely government has a real responsibility to get its own house in order! There is a lot for it to go at. How about the conflicts between treasury and HMRC? How about a tax code that makes rocket science look simple? How about Ministers who are conflicted?
And no doubt this barb is going to avoid the legal brethren.

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By Mr J Andrews
13th Mar 2024 12:11

The pot calling the kettle black ?
Raising standards works both ways !

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By Husbandofstinky
13th Mar 2024 12:12

Not that many years left to go. Phew.......

Kick this crap in the long grass along with MTD for some more years I reckon and by then, I couldn't give a monkey's.

This is politics and it will not raise standards. All it will do is create yet another level of bureaucracy and cost. End of.

Is it any wonder why the level of productivity has plummeted in this country.

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