Further to our 21/1/26 blog, where we summarised the new obligation for ‘tax advisers’ to register with HMRC and what this was likely to mean for law firms, HMRC have finally published their guidance (or at least some of it) originally promised in January. There is still more guidance to come, apparently.
The guidance explains if and when businesses need to register as tax advisers with HMRC.
The ‘if’
“If you interact with HMRC about someone else’s tax affairs and get paid for it” they will consider you to be a ‘tax adviser’, requiring HMRC registration. This is likely to affect a lot of law firms dealing with (even to a very limited extent) SDLT, CGT and Inheritance Tax returns, and HMRC queries etc, on behalf of clients.
‘Interaction’ with HMRC includes:
- Phone, post or email
- Messages through GOV.UK website or HMRC app
- Sending returns, claims or other documents to HMRC
‘But I’m not a tax adviser…’
The guidance is clear that this is not a get-out-of-jail-card. Firms will need to register with HMRC even if you do not view yourself, or your staff, as tax advisers, or describe your work as tax advice, or helping people with their tax affairs is not your main business function. Even if you only interact with HMRC on behalf of one client, or your terms of business say you don’t provide tax advice (but you do help clients with submitting their SDLT return, for example) registration will be required.
The ‘when’
From 18/5/26 those that meet the ‘if’ criteria will need to register with HMRC with an ‘agent services account’ in order to be able to continue interacting with HMRC on behalf of clients. (Where you already have an HMRC Self Assessment or Corporation Tax account, or only provide third-party payroll services on behalf of clients, the date from which you will need to register is later in the year.)
You will have 3 months from 18/5/26 to get your registration sorted (during which time you can continue to interact with HMRC on behalf of clients).
After the 3-month grace-period, if you haven’t completed your registration, you will no longer be able to interact with HMRC on behalf of clients and you may face enforcement action, including a fine and/ or a ban from future registration.
The ‘who’ and the ‘how’
It is the legal entity (i.e. your law firm) which must register with HMRC, as opposed to individual lawyers or members of staff who interact with HMRC ‘on the ground’. This will be a relief to individuals (and law firms) concerned that individual registration for numerous employees would be required.
We are promised further guidance on how to register ‘before’ 18/5/26 🤔 (At the moment all we really know is that it will involve an online application).
The registration conditions
Separate HMRC guidance sets out the conditions firms and ‘relevant individuals’ must meet in order to register.
Conditions for the business
- Evidence of AML supervision
- No outstanding tax returns, unpaid tax, tax offences, insolvency, or generally being in HMRC’s bad books!
Conditions for ‘relevant individuals’
- No outstanding tax returns, unpaid tax, tax offences, insolvency, or generally being in HMRC’s bad books!
- No disqualified directors
Who will be classed as a ‘relevant individual’ will depend on the number of officers (namely directors, partners and any equivalent roles) in your firm, but will generally include anyone who works for the business and plays a significant role in deciding, or actioning, how the business manages or organises its tax adviser activities.
If there are 5 or fewer ‘officers’ they will all be classed as ‘relevant individuals’, even if they have nothing to do with tax services, and if there are 6 or more ‘officers’ at least 5 people must be classed as ‘relevant individuals’…clear as mud?!
Can anyone avoid HMRC registration?
There is a limited list of those businesses which do not need to register, including in-house tax teams and payroll staff, or where you provide tax advice services for free. There are also some specific exemptions for those businesses interacting with HMRC solely in relation to specific tax issues, such as customs or import VAT (review the list in the guidance to see if any apply to your business).
‘Is this the same as the ‘tax adviser’ definition in the Money Laundering Regulations?
No! This is a different scheme, just to add to the confusion🙄 You need to address both definitions and ensure you register with HMRC and the SRA separately under the separate schemes depending which apply to you. The SRA’s Tax Adviser guidance can be found here. Do get in touch if you need help working through these definitions.
Next steps
The guidance we provided in our last blog on the subject still appears to stand. The main thing for law firms to focus on now, is whether you think you fall into the ‘tax adviser’ definition, who your ‘relevant individuals’ will be, and whether you and they will meet the conditions.
Once the further ‘how to register’ guidance is published, we will update you again 😊