HMRC’s plans to force tax advisers who are not members of a professional body to take out professional indemnity insurance (PII) will not protect consumers the Institute of Financial Advisers has warned.
The Government’s proposals were published in its consultation on ‘raising standards in the tax advice market’. It says there are a “minority of incompetent, unprofessional and malicious advisers whose activities harm their clients, reduce public revenue, and undermine the functioning of the tax advice market”.
HMRC believes that making insurance compulsory for all tax advisers could be a valuable first step towards improving standards in the market.
But the Institute of Financial Advisers disagrees and wants to see all tax advisers regulated by professional bodies. It accepts that PII cover offers a potential recourse for compensation for consumers, but says it has seen little evidence how compulsory PII raises the standards of the tax adviser and may even encourage complacency.
The Institute warns that anyone in the UK without a criminal conviction can practice as an accountant, without qualifications or regulation by a professional body. It says that a minority of unprofessional advisers can undermine trust in the profession as a whole.
James Burgoyne of Brunel Professions says: “It is highly unlikely that professional indemnity insurers would be willing to insure unprofessional, unqualified tax advisers with poor track records, so HMRC’s plans to make PII compulsory could drive the evidently undesirable out of the market.”