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Qualified by examination: Why it matters

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With the publication of HMRC’s consultation into raising standards in the tax advice market, Steven Pinhey extols the benefits of being exam qualified and a member of a professional body.

26th Mar 2024
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Since the publication of HMRC’s consultation on raising standards in the tax advice market – strengthening the regulatory framework and improving registration, tax advisers and agents up and down the country have been weighing up the potential impact that the proposals could have on them and their businesses.

One consideration causing concern is whether mandating membership of a recognised professional body would represent effective, proportionate and reasonable action to raising standards in the tax advice market. 

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 advisors. 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 with little or no oversight. The question to be answered is therefore is this position acceptable, and right? Or should the public, in line with their understanding, rightfully expect and receive greater accountability and equality in standards from tax advisers?

No surprise

It will not surprise readers that, as a member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CIOT) for over 20 years, I am a firm advocate for professional qualifications and membership participation. That said, I also recognise that being exam qualified and a member of a professional body does not in itself mean that those members automatically have higher standards than members who are qualified by experience (QBE).

However, membership of a professional body such as the ATT gives the public some comfort that its members are complying with the rules and regulation and, if not, that there are avenues for redress.

Is AML oversight enough?

Some will argue that the monitoring by HMRC for anti-money laundering (AML) purposes of QBEs is sufficient oversight, and that mandatory membership of a professional body is just creating more admin and costs. However, as readers will be aware, AML compliance is about understanding the people that tax advisers and agents interact with, whereas professional regulation is about the competency and accountability of the advisers themselves.

Professional qualifications

The ATT exams are designed to test people’s knowledge of taxation using practical everyday questions and scenarios. Therefore, for competent QBEs, sitting the ATT exams should not be a challenge, and could result in gaining new insights and knowledge that could be used elsewhere within their business.

There are those who query what difference a professional qualification makes, especially if it was attained a long time ago? 

Professional qualifications are only part of the entry requirements into professional body membership. Most professional bodies also require would-be members to have appropriate levels of practical experience and once they are a member keep their knowledge up to date. The ATT, for example, requires at least two years’ relevant practical experience to become a member, and once a member there are yearly compulsory professional development (CPD) requirements to show that members have maintained and developed the skills and competencies necessary to carry out their professional and technical duties. 

Professional conduct

Professional bodies also have an array of professional rules and practice guidelines that members will be required to adhere to. Additionally, seven professional bodies have created the Professional conduct in relation to taxation principles which require members to commit to the highest standards of professional conduct. These rules and guidelines ensure standards are upheld and members are accountable for their behaviour and actions. Failure to abide by these rules can result in disciplinary action, with sanctions ranging from financial fines or an admonishment through to suspension or expulsion.

I appreciate that attaining qualifications and maintaining membership standards takes time and effort as well as incurring financial costs, but there can be great benefits to being qualified and participating in all that professional bodies have to offer.  

Having membership allows members the use of designatory letters that show the world their credentials. There is also access to a like-minded community of professionals, publications, webinars, conferences, branch events and technical assistance.

How to respond

Finally, the subject of regulating the tax advice market is unlikely to go away. If you have concerns about the direction of travel, I encourage you to engage fully with this consultation and make your views and feelings known to HMRC by emailing [email protected] by the closing date of 29 May 2024.

Remember, this is only a stage one consultation, so everything is up for debate and discussion and nothing is settled, but the findings will inform whether the government pursues the introduction of mandatory professional body membership or whether another approach, such as regulation by a government body is adopted. The status quo does not appear to be an option.

Replies (13)

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By FactChecker
26th Mar 2024 17:51

Yet again (and without disagreeing with many of the points made), the elephant in the room (as at least I perceive it) continues to be ignored.

The need for (or benefits of) regulation are posited against the "comparable approach to auditors, solicitors and independent financial advisors" - but whilst that *may* hold some merit for the more specialist 1st and 3rd of those areas, I've always been troubled by its application to Solicitors.
Based on direct (frequently poor) experience, so not just anecdotal, the spread of knowledge & skills required by the various clients 'walking through their door' is swamped by the actual & current skills of the person/team put on your case.
This has nothing to do with the size or moral integrity of the practice, just a reflection that the breadth of knowledge that may fall within their sphere of professional services is beyond the scope of competence for almost any one person ... so they specialise, which is fine but not how their badge of registered professionalism is portrayed.

An easier illustration may be the medical profession - with which I have far too frequent interactions (but without fully understanding the role of the BMA and all their other regulatory bodies).
Indeed my knowledge of the workings (and failings) of the human body is woefully inadequate - but I'm absolutely certain that if I attended an appointment with, say, a Cardiologist and they started to suggest they'd shortly operate on my cranium ... I'd not be happy.

Obviously the complete set of those providing some element of Accounting services is a very broad church - and no doubt includes some shysters, some competents who are devoid of integrity, some who are properly professional but ever so slightly pliable ... all the way through to the rigidly correct.
I've encountered all those types both within those who are PB members and those who aren't.
I'll even go as far as to say (without quantifiable evidence) that a different category - those who simply don't realise when they've swum out of their depth - are slightly more prevalent amongst the regulated.

But my point is (finally you might well say) that I don't hear how PB regulation as a minimum mandatory requirement to provide any Accounting services (even those tangentially involved) will help the poor old prospective client to feel confident in signing-up.
And without that factor, the rest is just internecine arguments that ignore the heart of the problem.

Thanks (9)
Replying to FactChecker:
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By mumpin
26th Mar 2024 20:39

Most new clients who need slightly specialist advice have done a bit of Googling and could tell if an accountant was floundering. I think this latest push is more about reducing the supposed tax gap than protecting the public.

Totally agree with you about Solicitors though. In Scotland they’ve set up a Quango called the Scottish Legal Complaints Commission whose sole purpose seems to be to dishearten a complainant and, failing that, get them to accept the lowest possible amount of compensation. Because of this, Solicitors are sanguine about customer complaints. Contrast that with ACCA/ICAEW/ICAS where an accountant has 2 weeks to respond to a complaint in full and also supply 2 years CPD records.

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By mumpin
26th Mar 2024 20:37

I think in general practice, my ATT is far more useful than my ACCA qualification. ATT exams prepare the student for general practice.

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By cbp99
27th Mar 2024 08:07

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

Whose fault is it that most people are incorrect in their assumption? What have the professional bodies done to raise awareness among the general public?

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By EddieReddy
27th Mar 2024 10:11

How would a sole practitioner QBE who was required to become a member of a professional body like ACCA or ATT prove that they have the relevant experience to gain membership, and even if this could be done, could they even become a member without having passed the required exams for that professional body?

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Replying to EddieReddy:
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By MalcomB
27th Mar 2024 10:59

As a QBE practitioner myself, I have no objections to being required to join professional association. Unfortunately, the associations have no QBE entry method at present and seem to have no interest in taking on QBE members. If they were to create such a membership criteria, then I, for one, would apply.
The QBE members should still be required to maintain their knowledge by CPE and answer to the same rules as those who are exam qualified.
The problem the associations have is that if QBE can join without passing their exams then what is the incentive to take them.

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Replying to MalcomB:
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By AndyC555
02nd Apr 2024 11:29

Agreed. My own QBE includes having passed HMIT (as was) exams to become a FT (Full Technical) Tax Inspector, 10 years with HMIT and 27 years in practice around 7 of which were with 'Big 4' firms. I had rather fondly imagined a gradual retirement process, working part-time and/or independently for a few years before finally hanging up my sharpened pencil for good.

But if I'm faced with having to sit through an exam process just for those extra few years of work, I find myself wondering whether it would be worth while.

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By Paul Crowley
27th Mar 2024 10:51

This is all a bit pointless if clients can submit their own tax stuff.
Tax accounts exams last for one day and and depreciate faster than IT equipment.
Experience and keeping up to date is what is relevant. CPE is a state of mind, not a chore that needs certificates to prove.
The critical point is knowing when you need to either research or take advice.
Exams do not test that.

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By codling
27th Mar 2024 12:42

I too am a QBE. Started with Inland Revenue and graduated to inspector and left to join private practice. Only exams were inspector training. Worked for a multi office well respected firm in London for some years as a tax manager without any requirement to take exams or join a professional body but undertaking the usual CPE etc. Left London and joined another multi office well respected firm as a tax manager for one of their offices without the requirement to exams or to join a professional body.
Finally went into partnership with my partner, making sure that PII was in place and all other insurances etc and ensuring CPE continued. Built the practice up from scratch and going for over 20 years with lots of lovely clients. All in all have been in the tax game for over 50 years and coming up for retirement. This was only deferred when MTD was kicked further down the road.
Even at this stage I would have no problem in joining a professional body as long as it was with no exam and purely on the QBE. Any exam requirement would only bring forward the retirement date. The practical experience gained in dealing with people from all walks of life cannot be replicated in an exam, which would bear little resemblance to what you actually come across in real life. Possibly an alternative way for acceptance would be for working practices to be monitored for a short period along with a review of compliance procedures, which would then give a far greater indication of competence and ability.

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By peter morgan
28th Mar 2024 02:09

In Australia you need a Tax Agents Licence in order to be able to file tax returns. Membership of a professional body, or a body recognised by the Australian Tax Office is a requirement. This seems the way to go for quality assurance. Plenty of issues over here notwithstanding.

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By simong16
28th Mar 2024 13:13

The need for CPD does not require the membership of a professional club merely for a practitioner to complete the required test. What should be avoided is licence capture by an organisation or the need for membership to be a requirement for any job. By all means set a standard but do not create higher costs and barriers to entry into a profession. There is little proof that licencing actually leads to higher standards but it does lead to higher costs for both supplier and purchasers of services.
There are a significant number of tax filings, maybe even the majority that are not complex and there are some that are very complex and here the user of tax services should be able to access a tax practitioner based on their needs. If it is intended to follow a licencing regime then the licence has to cover all possibilities and ensure that everyone licenced is capable at both the complex and less complex level and push up the cost of basic tax services. Licencing is not the panacea that some believe.

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By Nick Belton
28th Mar 2024 16:27

One thing is for sure - the profession cannot continue like this. Currently it is like the Wild West out there, with some people attaining Xero certification passing themselves off as accountants, others using ACCA on their websites whilst not having passed the final exams.

I'm fed up of clearing up mistakes made by unqualified 'practitioners out there, and it is frustrating that I am giving up hours of my time complying with the ACCA's AML and CPD requirements whilst the cowboys out there crack on with fee-earning work with virtual impunity.

If HMRC regulate us it will be a disaster. We need to consolidate the number of professional representative bodies and speak with one voice as a profession.

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By Homeworker
08th Apr 2024 12:54

I started my career in the Inland Revenue, as a TOHG and left after 11 years. The accountancy firm I joined did pay for me to study the ATII (as I think it was called then) exam and I passed part one but failed part two as I could not cope with the restricted time allowed to read and answer the questions. I was able to join ATT when it was set up shortly afterwards and have remained a member.
I would imagine many older practioners asked to take an exam now would struggle to pass. The exam set up is not like real life, where you would rarely be expected to give an immediate answer to a complex question but would have the time to carry out any necessary research and formulate a suitable response. If a client phones me and asks a question, I prefer to say I will get back to them so I am not rushed into giving an incorrect answer.

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