Save content
Have you found this content useful? Use the button above to save it to your profile.
image of the word standards raised up | accountingweb | Professional bodies push for regulation of unaffiliated agents
iStock_matdesign24_raised_standards

Professional bodies push for regulation of unaffiliated agents

by

With the consultation into the tax advice market over, professional bodies are calling for the introduction of mandatory membership as a way to raise standards.

3rd Jun 2024
Save content
Have you found this content useful? Use the button above to save it to your profile.

With the consultation on options to strengthen the regulatory framework in the tax advice market now over, professional bodies are almost unanimously calling for the introduction of mandatory membership as a way of raising standards. 

In his headline talk that closed the Festival of Accounting & Bookkeeping back in March, Dan Neidle warned the packed-out room about the consultation and noted that it suggested there is a problem with standards in the tax profession. He said: “Well, they’re wrong. Are there some poor standards in the tax profession? I guess – just as there are in dentistry or particle physics. But the real problem is not a lack of standards.” 

Now Ellen Milner, director of public policy at the Chartered Institute of Taxation (CIOT), has told AccountingWEB that the consultation is “just a further step in a long-running debate” but added that they do support the need to raise standards.

“However, there is a need to ensure that this is looked at alongside the future model for AML [anti-money laundering] regulation – consultation closed last September but there’s still no outcome from HMT [ministerial department].”

So far as the tax advice consultation goes, Milner would “like to see a clear plan for raising standards, and better data sharing by HMRC to help maintain and uphold those standards”.

“This is likely to need to go beyond the question of regulation – and consider what issues would not be solved, or not be solved quickly enough by regulation, which will take at least three years to implement.

“At the moment not all tax advisers are subject to the high standards of professional conduct in relation to taxation (PCRT), which can leave consumers with unclear choices and potentially getting advice from unqualified and/or unscrupulous advisers. Also, those who get expelled from professional bodies for not meeting standards can continue to operate as tax advisers.”

A burdensome system

As for what a bad outcome would look like? A “disproportionately burdensome system which just adds costs and doesn’t actually create the platform for better monitoring and raising of standards,” was Milner’s opinion.

“HMRC has assured us that there is no intention to lower standards so we would not intend to dilute our high membership requirements. We would not wish to see a system introduced that becomes increasingly burdensome for professional bodies or practitioners.”

Milner noted that it would be difficult to assess how any new regulations would impact the day-to-day of all tax agents but added that for CIOT members, if it became a regulator, it would be likely to be for their small anti-money laundering (AML) population.

“For these we expect there would be some additional reviews and visits required – so some greater practice assurance. But until the detail becomes clearer as to the scope of who is to be regulated and what will be expected of the regulators, this is quite tricky to answer with any clarity.

“Clearly for the unaffiliated, there will be some much bigger choices as to which professional body to join or whether to leave the market altogether. In our consultation response, we have suggested that HMRC survey the unaffiliated to see which body they would be most likely to seek to join.

“At the moment the consultation gives no estimates as to the costs of any of the possible regulatory models.”

Certainly overdue

Glenn Collins, head of strategic and technical engagement at the Association of Chartered Certified Accountants (ACCA), believes the consultation was “certainly overdue – we have a tax system under real strain which is impacting productivity. We need change to this faltering tax system and ACCA has said professional body membership is a move in the right direction,” he added.

“We have concerns that HMRC will look for a single ‘one size fits all’ system and nothing will happen as a result. This is why we have suggested that while this is being worked on, quicker implementation over tax areas such as research and development (R&D) could be a solution.”

Less complexity, not more

Collins said the ACCA wants to see a “strengthening of the regulatory framework to meet the aim of raising standards in the tax advice market”.

He said: “We remain committed to championing simplification of the UK tax systems, and are keen to see this approach taken across all tax-related areas currently under review. The UK tax system needs less complexity, not more.”

He added that the body agrees that a transition period “gives the market sufficient time to adapt the introduction of mandatory professional body membership.

“However, we would welcome the introduction for specific areas such as R&D to be brought forward separately in a shorter period.

“ACCA has previously welcomed the stance that affiliated members of recognised professional bodies will help improve standards overall – we stand by this.”

Change in the public interest

The ICAEW has expressed a desire for any change to be in the public interest.

“The chosen policy must raise technical and ethical standards among tax practitioners, protect consumers from incompetent or unscrupulous practitioners but without increasing costs to the extent that taxpayers are unable to afford professional advice,” it said, adding that for a regulatory regime to be effective, there must also be a “level playing field that applies to all individuals and firms providing tax advice and services”.

“This includes those already subject to statutory regulation given the different degrees of supervision between professions.

“Additionally, changes to the regulatory framework should extend to all tax practitioners and not just those agents who interact with HMRC systems.”

The organisation also noted that while it believes there are issues with “all of the approaches suggested, if HMRC decides to introduce tax regulation, ICAEW’s preference would be Approach 1 (mandatory professional body membership) but only if such a model is appropriately designed and scoped”.

“We prefer Approach 1 in the knowledge that it is unlikely that many of the current unaffiliated tax practitioners would meet our entry requirements, which would not change.

“If monitoring requirements are increased or new oversight bodies are created, there is a danger of significant costs being pushed down to consumers and tax advice and services becoming unaffordable for the majority of taxpayers, undermining the key objectives.”

Replies (42)

Please login or register to join the discussion.

avatar
By AdamJones82
03rd Jun 2024 20:06

I've said before, the problem isn't passing a token number of exams, but who is going to sign off the experience requirement? Accountants won't want to be divulging practice information and client details to others, and what incentive is there for current members to sign it off too?

Thanks (10)
avatar
By FactChecker
03rd Jun 2024 20:15

Seems like the PBs don't understand that the famous Mandy Rice-Davies aphorism was sardonic?

Terry Pratchett would've enjoyed the unintended humour of seeing his fictional Guilds (of Thieves, of Assassins, etc) jump into the limelight with zero self-awareness.

Thanks (16)
Rob Swan
By Rob Swan
03rd Jun 2024 21:12

Apostle Accounting.....!?

“HMRC has assured us that there is no intention to lower standards..." Really! Maybe they should be looking a little closer to home before 'passing the buck'?

FactChecker 'nails' it!!

Thanks (16)
By SteveHa
04th Jun 2024 07:53

Quote:
professional bodies are almost unanimously calling for the introduction of mandatory membership as a way of raising money for them.

There, fixed that for you.

Thanks (35)
avatar
By Balancing
04th Jun 2024 08:11

This is a joke, yes?
ICAEW does NOT regulate anyway
Clearly they just want more subs

Thanks (21)
By Work Clever
04th Jun 2024 08:34

I guess the “professional” bodies forget how many of their members have been behind the biggest tax avoidance schemes and how little the membership did to prevent them.
It would be nice for the professional bodies to be held responsible for the actions of their members since they see membership as a way of protecting the public.

Thanks (34)
Replying to Work Clever:
avatar
By Balancing
05th Jun 2024 17:04

I took a matter to ICAEW about one of their members.
I took it all the way up to 'independent review' after the first level flicked me off.
Their conclusion was 'we have decided not to investigate'.
At least two other accountants have reported associated matters in relation to this accountant to HMRC, i wonder if they have bothered to do anything either.
A police constable in their part of the investigation of the crime I reported called said accountant 'a rat', but they then dropped the case.
The same man has not complied with a court order, but gets expensive solicitors to protect him.

In conclusion, it is not just the regulatory bodies - the whole of the system accepts and protects fraud.
Money Laundering regulations is another front. I called FCA to speak to someone in OPBAS, but three people in FCA didnt even know who OPBAS was.
"The UK, is known as the most corrupt place on earth", reportedly spoken by a Mexican mafia journalist, said a former investment banker.

Thanks (1)
avatar
By towat
04th Jun 2024 09:07

Well it certainly worked in the Audit industry, no affiliated firm has ever done a bad audit.

Thanks (18)
avatar
By johnjenkins
04th Jun 2024 09:08

Marvelous isn't it.
Both HMRC and our professional bodies want to raise our standards, yet their standards are the worse and really none of them are fit for purpose. Best form of defense is attack.

Thanks (17)
avatar
By RockyDog
04th Jun 2024 09:11

I've complained to ICAEW about very poor technical standards exhibited by a qualified accountant, & response was that the bar for professional incompetence was very high. Whilst you have this attitude from the professional bodies, little will change.

Thanks (11)
avatar
By Bendy Boy
04th Jun 2024 09:23

As a QBE accountant, working in the industry for 35+ years and running my own successful practice for 12 years, may I just point out that some of the worst handovers I've received have been from chartered/certified firms - and new clients generally have the biggest gripes concerning these firms. By all means, make us more accountable for what we do - but don't make us do exams and pay excessive membership fees to accounting bodies unless it is truly going to make a difference to the service that QBEs can offer.

Thanks (33)
Replying to Bendy Boy:
avatar
By Open all hours
04th Jun 2024 09:39

My experience is very similar to yours.

Thanks (9)
Replying to Bendy Boy:
avatar
By towat
04th Jun 2024 10:13

Ditto, the issue should be accountability, we are all (or should be) registered with HMRC as agents and for AML etc, let HMRC exclude bad Tax Agents and remove online filing privileges.

I suspect much of the Institutes' agenda is to do with income generation.

Thanks (11)
Replying to Bendy Boy:
avatar
By OldLag
04th Jun 2024 10:26

Could not agree more! Having been trained by the old Inland Revenue as a Tax Inspector and with 33 years experience (about 50/50 with IR/HMRC, and running my own sole practice), I've seen some real shockers from chartered/certified firms. Equally there are some dreadful agents who are not members of professional bodies (not as many as you'd think though).

These pale into insignificance compared to the current HMRC shambles of course, which I doubt anyone could justify this side of a politician.

I've seen plenty of experienced & professional advisors (from both sides of the fence), who do a far better job for their clients than the folk relying on letters after their name. What do I know though, I only investigated clients represented by various advisors for 16 years.....

Thanks (11)
Replying to Bendy Boy:
avatar
By Ralphgab
05th Jun 2024 09:38

I am very like you, QBE, ex Customs and Excise, practising for 40 years and we have had some very poor handovers from chartered/certified firms. One didn't have a clue about VAT partial exemption. I could cite several other issues but I have VAT returns to file! I worked for one chartered accountant for 12 months and was appalled at the standard of work churned out. He had a compliance visit from the ICAEW which I was sure would find all sorts of problems but they gave him a clean bill of health. No doubt they ticked all the boxes! Our costs have been increased by AML and GDPR compliance, no doubt any measures imposed will increase costs yet further.

Thanks (1)
Replying to Bendy Boy:
avatar
By chancewind
06th Jun 2024 12:23

totally agree, I know the level of clients I can deal with mostly small traders and small income tax returns. I would not touch anything limited. I have professional indemnity insurance, registered with information commissioners and hmrc for money laundering.

Thanks (1)
Should Be Working ... not playing with the car
By should_be_working
04th Jun 2024 10:23

Professional bodies push for regulation of unaffiliated agents.

Of course they are. It's erecting barriers to entry to the market. Naturally it'll be 'in the public interest'.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices." - Adam Smith.

Thanks (10)
avatar
By SkyBlue22
04th Jun 2024 10:25

Having a qualification or accreditation doesn't mean you provide good quality service or have high standards yourself. Dealt with a client recently with possibly the worst qualified former accountant I've ever come across.

Thanks (12)
Morph
By kevinringer
04th Jun 2024 10:52

What about HMRC raising its standards. I phoned HMRC's ADL about Basis Period Reform twice, last month, and both times the HMRC call handler had never heard of Basis Period Reform. How can HMRC's "helpline" give help when the advisers don't know the single biggest issue affecting SA this year? The PBs need to kick back and demand HMRC addresses their own standards, when will inevitably lead on to service levels.

Thanks (10)
Replying to kevinringer:
avatar
By stevenckay
04th Jun 2024 19:47

Am amazed that you managed to bypass the automated voicemail to speak about Basis Period Reform...

I spent 90 minutes on hold last month for a basic SA refund enquiry. Was in the queue at the local supermarket when they answered at 5.40pm. I only held on out of indignance and to see if they would actually reply. I still took the call though...

Thanks (1)
Replying to stevenckay:
Morph
By kevinringer
05th Jun 2024 08:51

I phoned the ADL 0300 200 3311 which doesn't have automated voice recognition, though it still has plenty of recorded messages. Interesting that you were in a queue for 90 minutes because in recent times HMRC have been cutting me off after an hour and 12 minutes. Maybe the hour and 12 minutes is on the ADL only.

Thanks (0)
Morph
By kevinringer
04th Jun 2024 10:55

I responded to the consultant and asked HMRC how HMRC intends to regulate the "advisers" that most taxpayers are likely to use in future: Google and AI. There's no point regulating humans if AI can compete unregulated.

Thanks (7)
By jon_griffey
04th Jun 2024 11:10

As I have said before, simply grandfather existing unqualifieds into a new ad-hoc body, which can then enforce some basic requirements like PI, code of ethics etc, and weed out the bad apples and then from that day any future practitioners must do exams and belong to one of the existing professional bodies. Its not unreasonable to expect future practitioners to have at least a qualification like ATT and AAT.

Thanks (11)
Replying to jon_griffey:
By Work Clever
04th Jun 2024 11:50

Carnegie Knox promoted the SP Management tax avoidance scheme whilst a ICAEW member. A scheme that has caused huge amount of stress to those unwittingly believing it was HMRC approved as advised and now been chased for much more than they benefited by HMRC, who don't have the resources to deal with the cases so drag them on for years. Some participants choose suicide as a way out.
Just remind me how their tax advisors membership of a professional body protected these participants and how is this body now helping them with the HMRC cases against them.

You may also want to read more failures with regards to Barrowman with no protection to the public from their members actions https://www.taxwatchuk.org/douglas-barrowman-complaint/

Thanks (4)
Replying to Work Clever:
By jon_griffey
04th Jun 2024 12:59

There are always bad apples. You will always hear of surgeons badly botching operations but that doesn't mean we should allow joe public to set up as a medical practitioner with no qualifications. Having a threat of losing ones professional registration and thus livelihood will surely focus minds. You only have to look at the recent scandal of Apostle Accounting and how the person behind it has simply walked away and set up again with impunity.

Thanks (2)
Replying to jon_griffey:
By Work Clever
04th Jun 2024 14:11

Delving into someone’s body whilst they’re alive, fixing an issue and putting it back together again with that person still breathing is a lot different to accountancy and tax advice. I’m certainly not arrogant enough to compare the professions as equal.
Apostle Accounting was a member of ICB and despite that committed these scandals and the action was taken afterwards. Again being a member of a body didn’t prevent this happening. Whilst you mention walking away from a failed business and starting up with impunity, how many times does this happen on the advice of qualified practitioners with other businesses pheonixing up again debt free with their previous creditors including HMRC collecting pence in the £?

Carillion is another prime example with huge debts that had been audited by KPMG assuming by a lot of qualified accountants. What had their professional bodies done ensure the audits were performed professionally so that stakeholders could rely on the financial statements. This would be the same professional bodies that create the standards and set the standards via the FRC

Maybe, just maybe it’s the professional bodies who aren’t fit to regulate the accountancy profession. Yes, they can qualify a person to be an accountant but regulating their actions thereafter is something they lack the ability to do. If they want all accountants to be members of a body then that body must be held responsible for their members. After all a patient who receives botched surgery sues the hospital for the surgeons action and not the surgeon.

Thanks (3)
Replying to jon_griffey:
avatar
By johnjenkins
04th Jun 2024 12:13

Jon, nothing can stop the small bad apples as they will submit using clients tax account. The BIG bad apples are protected by the powers that be who tend to make their own laws.

Thanks (1)
avatar
By Self-Employed and Happy
04th Jun 2024 11:15

People won't like this but I don't care and I've said it plenty of times before, protecting the word "accountant" is where this should start. People who are qualified (ACA / ACCA / CTA) and hold an active membership / practising certificate are allowed to use the word.

Thanks (5)
Replying to Self-Employed and Happy:
avatar
By AdamJones82
04th Jun 2024 12:35

That is why the term chartered accountant is in place.....

Thanks (5)
Replying to AdamJones82:
avatar
By Self-Employed and Happy
04th Jun 2024 14:29

I agree, but that isn't enough of a differentiation in my view given literally anyone can rock up and say "I'm an accountant", it completely discredits the profession.

Thanks (1)
Replying to Self-Employed and Happy:
By SteveHa
04th Jun 2024 17:18

Quote:
anyone can rock up and say "I'm an accountant", it completely discredits the profession.

I'm QBE (and have no intention of changing that only 7 years away from retirement).

I'd say that those big companies such as PWC and KPMG with their dodgy audits, or the qualified and regulated accountants promoting dodgy tax avoidance schemes are the ones that discredit the profession. Not people like me that act within the letter and the spirit of the law, with professionalism and integrity.

Thanks (7)
Replying to SteveHa:
By SteveHa
04th Jun 2024 20:37

It may be worth adding at this juncture, I offer (tax) technical support to CTA qualified colleagues.

There's no substitute for real experience.

Thanks (2)
Replying to Self-Employed and Happy:
paddle steamer
By DJKL
05th Jun 2024 11:32

So- we need a competition- set a random QBE (say an ex HMRC one ) against a fairly recently qualified CA from ICAS and ask them practical tax question, answers judged by their peers.

Of course ICAS/ICAEW etc members do need to consider "first they came for QBE, and nobody spoke", pretty soon CTA will be saying a CA is not really qualified to give tax advice- slippery slope.

Thanks (2)
avatar
By Metaller76
04th Jun 2024 11:35

Several times in the consultation document HMRC state 'equivalent number of years experience' being allowable to join a professional body.

E.g.

"Example 1:

Becoming a member of a professional body
A tax practitioner would need to meet professional body membership requirements such as, being registered for AML supervision by HMRC or a professional body supervisor, holding a relevant qualification or equivalent number of years experience, obtaining professional indemnity insurance, undertaking continuing professional development and declaring they will abide by the professional body’s code of conduct."

So could there be professional bodies that allow a 2 tier system: 'Qualified' and 'Unqualified' perhaps.

Thanks (1)
Replying to Metaller76:
avatar
By FactChecker
04th Jun 2024 12:31

Can't see a large queue being formed by those keen to pay money in order to be able to call themselves 'Unqualified'.

Thanks (4)
Replying to FactChecker:
avatar
By Metaller76
04th Jun 2024 12:39

Ok, different words, but a 2 tier system.
Maybe 'Full Membership' Quals and 'Basic Membership' for QBEs.

The consultation document mentions several times that 'relevant experience' would be allowable for some sort of PB membership.

Thanks (1)
Replying to Metaller76:
paddle steamer
By DJKL
05th Jun 2024 11:50

Certainly you have a range of membership steps /routes (associate etc) re say Town Planners, RTPI, so why not accountancy/tax.

I looked at the planning stuff a few years back as my daughter has the educational qualification side (Msc Urban Planning) and now with requisite years just needs to either present a planning project paper etc (mini dissertation -5,500 words) or add circa one more year's relevant work experience to her MA, Msc- she has four years at present.

https://www.rtpi.org.uk/membership/assessment-of-professional-competence...

Or she can carry on doing her work without bothering with getting her chartered status, MRTPI (which seems to be her current route as saves some fees and from next year can later get it if really needed)

Thanks (1)
avatar
By Mr J Andrews
04th Jun 2024 12:46

It's amazing how one nameless self righteous person with time on his / her hands can delve into trivia with perhaps the aim of getting more coffers into his professional body without the brain to tackle the real problem. Or perhaps the real problem is too big to touch a bargepole with.
Whoever triggered the collective professional bodies to { unanimously } seek so called mandatory membership to, as yet , some unknown quango overlooks the real problem of the rogues operating within professional bodies which we hear so about so often within A.W. Why pretend otherwise ?
For that matter why are the judge / jury professional bodies continually turning blind eyes to the sheer incompetence of HMRC ? Words and moans now and again are nothing more than being attacked by a toothless sheep. But then again , there's no financial gain from the Revenue to hit them head on and restore the service which they were once respected for. Furthermore , the donkey approach of HMRC becoming the arbiter is sheer madness. Why does this continual kowtowing to the naked emporer even enter the equation ?
Aptly put by Ellen Milner this''.......further step in a long running debate........'' could run as long as MTD. But hopefully some common sense will be ultimately be shown rather than trying to squeeze small competent practitioners out of business for the sake of tunnel vision to what may not be a problem.

Thanks (1)
Rob Swan
By Rob Swan
04th Jun 2024 14:42

I thought the PBs existed to endorse a degree of 'competence'.

Integiry is an etirely different matter AND entirely 'practical'.

Thanks (1)
avatar
By fmuk
05th Jun 2024 09:37

Who are the 'Professional Bodies'?

Thanks (1)
avatar
By wyoming
05th Jun 2024 09:49

I currently work in an accountancy practice and I am ATT qualified. Outside of work, I act as agent for a very small number of family members and close friends (maybe 10 people) on a pro bono basis. These are people who don't need advice from a regulated firm and most couldn't afford it anyway. My qualification means that I would be OK for now, I guess, but there's no way I will pay a subscription/maintain affiliation post retirement just to be able to continue to look after these few cases. So, potentially a few people who always quietly complied with their tax obligations with my help would then be struggling. How is this a good thing exactly?

Thanks (2)
avatar
By Homeworker
10th Jun 2024 10:43

In the past I have worked for several firms of accountants, both as an employee and as a subcontractor. I frequently found that the qualified accountants did not bother to keep up to date with the tax changes and relied almost entirely on the tax department to do this. Passing an exam does not mean you are still able to do the job years later!
As an aside, why is AAT recognised by the finance houses as capable of certifying loan applications when ATT is mostly not! This really bugs me when we are so much more likely to be up to date with the tax regulations.

Thanks (2)