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HMRC’s updated standard for agents endorses PCRT

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HMRC has updated its standard for agents by adopting standards already applying to professional body members. This comes as the Revenue continues to raise standards in the tax advice market.

23rd May 2024
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As part of HMRC’s ongoing work around raising standards in the tax advice market, the tax department has updated its standard for agents including a welcomed endorsement of the Professional Conduct in Relation to Taxation (PCRT) code, which is co-authored by seven of the leading professional bodies.

In the Spring Budget the government kick-started plans to tackle a 'perennial thorn' in its side by launching a consultation on raising standards in the tax advice market. The consultation focuses on strengthening the regulatory framework for agents, with three main possible approaches set out: mandatory membership of a recognised professional body; joint HMRC–industry enforcement; and regulation by a separate statutory government body. 

The controversial consultation is still open, with opinions staunchly defended on both sides of the debate, but the recent update to HMRC's standard for agents could be a hint at the direction of travel, with the department appearing to lean towards membership of a professional body as the current front-runner.

Working together

Currently, contrary to popular belief, membership of a professional body is not mandated for agents providing tax advice and services. However with 65% of agents already members of professional bodies, HMRC is keen to work collaboratively with the bodies to ensure consistent standards are upheld across the board.

The PCRT is co-authored by seven of the leading professional bodies: the Institute of Chartered Accountants in Scotland (ICAS); the Chartered Institute of Taxation; the Association of Tax Technicians (CIOT); the Association of Accounting Technicians (AAT); the Association of Chartered Certified Accountants (ACCA); the Institute of Chartered Accountants in England and Wales (ICAEW); and the Society of Trust and Estate Practitioners (STEP).

It sets out the principles and standards of behaviour that members, affiliates and students of the PCRT bodies must follow in their tax work. The latest version of the HMRC standard for agents ('the standard') published on 17 May recognises and endorses the PCRT code confirming that “If agents meet their professional body’s code of ethics, however, the HMRC standard for agents should not place further requirements on them.”

Previously, the standard set its own list of principles which did not always quite align with those set by the individual professional bodies. By clarifying that the HMRC standard does not override the ethical codes of the professional bodies, any potential conflict or misalignment is eliminated. For agents who are members of a professional body, the admin burden of having to adhere to two separate codes of conduct is also removed.

Fundamental principles

HMRC’s standard focuses on three of the five fundamental principles found in the PCRT. These are:

  • integrity;
  • professional competence and due care; and
  • professional behaviour.

There is also a section in the standard specifically relating to tax planning, including that agents must act lawfully, be transparent and exercise professional judgement when advising clients on tax planning arrangements.

The PCRT bodies have welcomed the collaborative approach taken by HMRC to resolve inconsistencies and address a number of issues raised by their members in the 2023 update of the standard.

Professional bodies welcome update

In a joint statement, the PCRT bodies said: “We welcome the renewed recognition of PCRT as the gold standard through its inclusion in the revised standard.”  

“There is currently considerable focus on potential future regulation of the tax services market with an ongoing government consultation. The PCRT bodies are keen that any future direction raises standards consistently across the whole market to the high levels required by PCRT.

“The revised standard is reassuring in its endorsement of PCRT as setting and meeting the desired high standards of tax agents, as well as ensuring that those meeting it are not having to consider multiple, overlapping codes of ethics.”  

Susan Cattell, head of tax technical policy at ICAS added: "We are pleased that the updated standard recognises the importance of the PCRT and states that if agents are meeting their professional body's code of ethics, the HMRC standard shouldn't place further requirements on them."

When HMRC updated the standard for agents in January 2023, John Cullinane from the CIOT said that the changes at the time broadly reflected PCRT but didn’t go as far as the PCRT in areas such as avoiding conflicts of interest and continuous professional development.

HMRC has a range of powers to deal with agents who it finds are not upholding the standards, including:

  • blocking access to HMRC’s agent services;
  • dishonest tax agent conduct notices, with the potential for further penalties and publication;
  • criminal investigation if an offence is suspected; and
  • refusing to deal with an agent altogether.

Time is running out for taxpayers, agents, professional bodies and other interested parties to respond to the consultation, as it will close on 29 May 2024.

Responses can be provided by answering the consultation questions or via email, post or telephone with details provided on the consultation page.

Replies (23)

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Rob Swan
By Rob Swan
23rd May 2024 16:35

What a pitty HMRC can't improve their own standards first!

https://www.accountingweb.co.uk/community/blogs/philip-fisher/hmrc-achie...

Childish rant over!

Thanks (19)
Replying to Rob Swan:
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By Tom+Cross
23rd May 2024 16:43

Be fair to yourself. It isn't a childish rant, at all.
I imagine that we all want to reach high standards in our work ethic and capability to deliver quality service.
My problem is; I sincerely believe that it's perverse, for the very organisation, who determines the 'rules' to have such shocking standards in its own performance and ability.
It's probably time for a public enquiry into HMRC, and with that comment, I'll go and release my pink pigs for flight!

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Replying to Rob Swan:
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By FactChecker
24th May 2024 14:23

In order to avoid repeating myself, following that link to today's other article will show my views on the heart of the problem.

However, a bit like listening to the squeals currently emanating from the Vennels in the PO Enquiry, the foundational problem is extremely basic ... you can dress it up as dysfunctional culture but, to speak plainly, the vacuum in ethics or integrity at the very top of HMRC makes it impossible to believe the fine words in their own 'standards' or variety of codes of conduct.

Without belief one turns to evidentiary facts ... and in their absence can then only conclude that this is 'do as I say and not as I do'!

Thanks (6)
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By Paul Crowley
23rd May 2024 17:23

'HMRC has updated its standard for agents by adopting standards already applying to professional body members. This comes as the Revenue continues to raise standards in the tax advice market.'

I see no evidence of that, as in HMRC raising standards, either their own or for the few bad apples.
https://www.accountingweb.co.uk/practice/people/apostle-accounting-hit-w...

PCRT has been around for a very long time. HMRC dragging its heels would be more accurate, or possibly
HMRC finally recognises that the accountants' standard is appropriate.

Thanks (10)
Replying to Paul Crowley:
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By GHarr497688
23rd May 2024 18:19

You took the words right out my mouth

Thanks (5)
Replying to Paul Crowley:
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By cbp99
24th May 2024 08:38

Or, for a less egregioius example than Apostle, PWC: https://www.accountingweb.co.uk/tax/business-tax/court-rejects-kwik-fit-...
It is difficult to see how this got through PWC'S own PCRT screening.

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VAT
By Jason Croke
24th May 2024 08:50

So agents are expected to have :

integrity;
professional competence and due care; and
professional behaviour.

When does the above list start applying to HMRC?

There is a serious point here. For those of us who are experienced and professional, we advise our clients correctly, but we also know that HMRC are under resourced and so focused on working from home and ignoring emails, that you could easily advise a client to just reclaim the VAT on that car or put that family holiday to the Maldives through the books as a "business meeting" and chances are HMRC will notice.

The more HMRC become bad at their job, the easier it is for taxpayers to take a chance, push the limit, get cheekier. BBL's, furlough, it was a free for all and a guarantee of no follow-up, fill yer boots.

We see it elsewhere, little police presence on the roads and streets, so speeding/uninsured drivers and more street crimes, because people will push in the absence of enforcement.

It's therefore really important that HMRC are seen as the paragon of professionalism and respect of the law, at the minute, it is kind of the wild west, it is only the integrity of professional tax agents that is probably keeping the tax gap down.

Thanks (36)
Replying to Jason Croke:
Stepurhan
By stepurhan
24th May 2024 09:00

Summed it up perfectly. I cannot think of anything to add.

Thanks (4)
Replying to Jason Croke:
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By johnjenkins
24th May 2024 09:20

Yeh but Rishi has said "we have turned the corner" and "that people are starting to feel the upturn". If I remember right Jeremy Hunt has also endorsed that comment.

Planet Hollywood.

Thanks (4)
Replying to Jason Croke:
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By Tom+Cross
24th May 2024 11:03

500,000 Civil Servants couldn't possibly be wrong. Or, could they..............
think Post Office, NHS factor eight, Home Office (described previously -May 2006 -as unfit for purpose), together with all our very REAL experiences with Sir Harra's travelling circus.
A walking time bomb, if you look at the overall organisation.

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By PAULLEWISFCCA
24th May 2024 09:33

Extortion racket leadership expects high standards, but who gave them authority over you.

Thanks (3)
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By Jack the Lad
24th May 2024 14:01

Hypocrisy of the highest order! I endorse previous comments about the "standards" of HMRC. I have been in practice since my initial days as an articled clerk in 1958, and have never had it so bad -- appalling does not even cover the so-called "standards" of HMRC.

On the matter of tax advisers being part of a "professional body", I was a member of ICAEW for 25 years, and do not want to be part if it again --they do nothing for small practitioners and are there to protect the largest firms. I carry out my work as a tax adviser with the highest professional standards, but am frustrated by the lowest professional standards of HMRC and indeed many members of professional bodies.

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By Mr J Andrews
24th May 2024 14:09

I'm OK with PCRT . Perhaps the seven professional bodies can also do someting about HMRC's ACRT - Amateur Conduct in Relation to Taxation

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Replying to Mr J Andrews:
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By Pam Moreland
27th May 2024 15:42

Oh I SO agree!

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By moneymanager
24th May 2024 18:25

Until around 1920, the US had a large and diverse medical profession including many that today would be considered fringe even loopy, then along came Rockerfeller who instigated the Flexner Report which set up 'official bodies' which effectively became paid gatekeepers, that's why the US has the most expensive healthcare, well, health business and the worst outcomes and we're not far behind; lower barriers to entry fosters innovation and lowers costs but participants are unherdable cats.

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By GrayMan
27th May 2024 11:04

Having worked in the inland revenue during the 1960s for 7 years I decided to join a Chartered Accountants staff for a further 7 years. The basic tax agents exam is very simple, it wouldn't have added anything to my existing knowledge, so I didn't take it. The HMRC had no problem accepting my accounts & tax computations neither during my employment, nor subsequently when I obtained my own practice. These days I would have been "persona non grata" I suppose, rather humorous as my tax knowledge was principally gained there. The standards of the inland revenue have declined out of all recognition, except in the agents they will accept. Even if these sanctions were to apply, the inland revenue cannot refuse to accept accounts & tax computations prepared by anyone, provided they are signed by the client whether they like it or not, so it seems rather pointless.

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Replying to GrayMan:
Rob Swan
By Rob Swan
27th May 2024 15:54

"pointless" 'Nuff said!! :-)))

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Replying to Rob Swan:
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By GrayMan
27th May 2024 17:44

Previously submissions were examined by tax inspectors. I can appreciate filing income tax returns online is no real hardship, expecting the average person to manage self-assessment is more demanding and asking for trouble.

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By Red1960
29th May 2024 10:18

I'm just wondering about the ability of HMRC to manage the tax system and fulfill its statutory obligations.

Assuming HMRC actually achive their ambition of preventing 35% of agents from advising the taxpayers who want them to act on their behalf and then throw in the implementation of MTD into the mix.

Does anyone have any predictions for the impact on compliance, the tax gap and HMRC's ability to cope?

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Replying to Red1960:
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By GrayMan
29th May 2024 10:51

The government created the problem by cutting staff to the bone as a cost-saving exercise dumping responsibility on an ill-advised unprepared public while expecting everything to run smoothly and fining those who didn't make deadlines. If the Inland Revenue was similarly fined, they regularly fail to meet deadlines more than anyone. If they refuse to accept perfectly reasonable submissions will this result in 35% more fines? Time we had a Taxpayers' Ombudsman, who could decide independently what was reasonable rather than have the Inland Revenue police theirself.

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Replying to Red1960:
Rob Swan
By Rob Swan
29th May 2024 13:36

BEGIN_RANT
HMRC failing miserably at (just about, and possibly completely) eveything. Have been for years now. Can't see any changes on the horizon, except possible change of Chancellor, but doubt any significant change will occur. As they used to say, 'The Civil Service is the 'permanent' Government'.
It'll probably all collapse at some point - soon after privatisation of HMRC I shouldn't wonder - and only then, just maybe, somebody will actually do something - or.... Not!
END_RANT

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By ralan
29th May 2024 14:26

How about HMRC updating their standard to answer telephone calls.
Called VAT and after holding on for 29 minutes they cut me off.
Seems they want to introduce standards for us but they have NO STANDARDS they want to impose on themselves.
One law for us another for them!!!!!

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Replying to ralan:
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By johnjenkins
29th May 2024 15:22

Had a great one today. Got through in less than 5 minutes. "I need to look for the 64-8 in the post" after I gave her the CFSS number. Didn't ask who I was and that was it, phone went dead.

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