Where have these new rules come from and what do they mean?
In the government’s budget towards the end of last year, it was announced that all those who advise clients in respect of tax, or interact with HMRC on behalf of clients, will be required to register with HMRC and meet minimum standards in order to do so, with the current intention being that it will come into force in May 2026, with a 3 month transition period to be fully compliant. (For law firms, this is in addition to being SRA-regulated and AML authorised). There is no finalised legislation as yet but the tentative definition of a “tax adviser” is anyone who, “in the course of a business, assists other persons with their tax affairs”. This will include anyone who:
- Advises another person in relation to tax
- Acts as an agent in relation to tax
- Assists with any document that is likely to be relied on by HMRC to determine the other person’s tax position
- Is appointed indirectly or at the request of someone other than the client
- Provides tax advice as part of activities other than assisting clients with their tax affairs.
Effectively anyone who interacts with HMRC on behalf of clients’ tax affairs, such as by telephone, post or email, via the HMRC website/ portal, or by completing forms and filing returns (including SDLT returns), claims, notices or other documents with HMRC, will be covered by the new legislation.
Limited guidance
At present there is limited information but HMRC are due to publish detailed guidance on who needs to register and what they need to do later this month, with the legislation required to proceed with this proposal included in the Finance Bill 2025-26, a draft of which can be found here. In the meantime, some information can be found in HMRC’s Policy Paper.
Registration/ eligibility requirements
These currently relate to tax advisers and their senior managers:
- having a clean record in relation to tax returns/ affairs, not being disqualified as a director, or having unspent convictions, and not being insolvent. Full details can be found in section 5 of the draft legislation.
- being able to meet “any standards expected of tax advisers in their dealings with HMRC that are specified in a notice or other document published by HMRC…”. We shall have to await the guidance to fully understand what this means, but presumably it relates to competence to provide this tax advice/ accurately complete tax returns etc, given HMRC’s stated objective is to “monitor and exclude tax advisers who are objectively unable to meet HMRC’s Standards”.
- being registered with a supervisory authority for the purposes of AML supervision (e.g. the SRA, which any SRA-regulated law firm providing tax advice, no matter how limited, should generally already be).
There may also be other criteria published by HMRC in their eagerly anticipated guidance.
Exceptions?
There are certain limited exceptions to the requirement for registration, which can be found in the draft legislation. However, like the broad definition of “tax adviser services” under the Money Laundering Regulations (MLRs), which generally brings most law firms into scope if they do more than simply refer clients to the HMRC website, this new legislation is likely to classify any firm that touches on tax – even if they don’t hold themselves out as tax advisers – as a “tax adviser” for HMRC registration purposes.
Sanctions for failing to register/ meet eligibility requirements
There will be sanctions for tax advisers and senior managers failing to register with HMRC and/ or meet the eligibility requirements, including fines of between £5,000 and £10,000, and having their registration suspended, with an obligation to inform clients if they have been sanctioned.
What to do now
Until HMRC publish its guidance on the process, there isn’t much you can do yet. However, to be as prepared as possible, you may wish to:
- consider which activities you carry out (and want to continue being able to do so) are likely to be classified as tax adviser services (HMRC has confirmed that it will include conveyancers assisting clients with SDLT forms) and who might be defined as a “tax adviser”.
- identify those senior managers with control/ influence over tax work/ who supervise “tax advisers”.
- consider the draft eligibility criteria in relation to the identified tax advisers and senior managers (SRA-regulated firms and individuals should hopefully already meet the HMRC criteria!).
- ensure your firm is authorised by the SRA for AML purposes (check your FA10/ FA10b forms). Given HMRC will be treating many more things, that firms may previously have viewed as administrative steps, as tax advice, if you are not already authorised for AML purposes, we recommend that you rectify this asap, given the wide definition of “tax adviser services” in the MLRs referred to above.
- consider whether your staff/ senior managers may need additional training in relation to the tax advice they provide.
- keep an eye out for the guidance and be ready to act once the process has been clarified, including making the necessary application(s) and updating any relevant policies as necessary.
Watch this space for further updates once HMRC publish its promised guidance and we know more about the practical implications for firms.