Tax  

HMRC warns of 'actively corrupt' tax advisers

HMRC warns of 'actively corrupt' tax advisers

The taxman has warned of "incompetent, unprofessional, and actively corrupt" tax advisers as it pledged to raise standards of advice.

Whilst HM Revenue & Customs said most tax advisers were "technically competent and adhered to high professional standards", it warned there were examples of bad practice in the sector which threatened consumers.

It comes as the government launches a call for evidence to improve standards in tax advice, a move it said was partly driven by the loan charge scandal. 

Many taxpayers now facing the controversial loan charge only agreed to the so-called disguised remuneration schemes after seeking expert tax advice. 

Jesse Norman, financial secretary to the Treasury, said many of those who had fallen victim to the additional loan charge had found themselves with "no effective remedy against that bad advice."

The government first confirmed it would be launching a consultation into raising standards of tax advice in last week's Budget and in a call for evidence published yesterday said it wanted to insure taxpayers received "competent, professional and trustworthy" advice. 

HMRC said: "There are some advisers who do not provide a good quality service to their clients.

"This may be because they lack competency or have not kept up with technical changes, are dishonest, or do not hold relevant specialist expertise.

"Some tax advisers do not adhere to the high ethical standards that their professional bodies require of them, especially when providing advice on models such as disguised remuneration or other avoidance vehicles."

The taxman warned it had also seen advisers who failed to submit their own returns, who made calculation errors and those who submitted "entirely false returns or who defraud clients and HMRC".

The government also said it had seen some advisers take a cut of more than 40 per cent to mediate expense claims the customer could "easily" make themselves for free, to then provided no help to the client if HMRC questions the claim. 

HMRC added: "HMRC has also seen advisers who have charged high fees to sell avoidance schemes, insisted that the client signs a contract to confirm they will not sue the adviser if there are problems with HMRC, and then disappeared."

The call for evidence will run for 10 weeks until May 28, 2020.

George Bull, senior tax partner at RSM UK, said the call for evidence made it clear HMRC's current concerns were "driven heavily" by issues arising from the loan charge.

Mr Bull said: "Many of those issues have their roots in the behaviour of certain advisers and their clients up to 20 years ago.

"In the intervening period, the powers of professional regulators and of HMRC to enforce higher standards and to penalise bad behaviours have increased dramatically.