Tomlinson: Basic minimum standards
The government gave no sign of backing down on requiring conveyancers to register as tax advisers with HM Revenue & Customs in this week’s debate on the Finance Bill.
The provisions in the bill – which will apply to conveyancers who deal with HMRC by submitting stamp duty land tax returns – passed the committee stage of the bill this week with little push back.
Last month, reflecting alarm in the legal profession, the Council for Licensed Conveyancers wrote to HM Treasury to urge ministers to reconsider the move.
However, introducing the provisions to the bill committee this week, exchequer secretary Dan Tomlinson explained that “anyone paid to interact with HMRC on behalf of clients – for example, by submitting tax returns or other information to HMRC – will fall within scope of the requirement to register.”
He continued: “Businesses and individuals who will be required to register come from a variety of professions, including chartered accountants, bookkeepers, payroll specialists and conveyancers who interact on behalf of taxpayers for stamp duty land tax… That is not the same as regulating tax advice.”
The minister stressed that HMRC would not review the quality of the advice provided, qualifications or professional conduct.
“Instead, the measures are specifically about stopping harmful tax advisers who do not meet the basic minimum standards.
“At registration, tax advisers will be asked to confirm that they will meet HMRC’s standards for agents. The measures do not give HMRC new powers to investigate whether applicants breach the standard for agents, and registration would not be suspended if a minor breach is discovered.”
In response to concerns from MPs about the exercise of HMRC’s powers in relation to breaches, Mr Tomlinson said HMRC would suspend an adviser “only after due process has been followed, including offering opportunities to comply and a chance for the adviser to explain if there is a good reason why they are unable to do so.
“I think that is reasonable and proportionate. We also need to ensure, as I said earlier, that we have a floor in the system, so that those who do not meet the standards – and who breach them in a serious way – are unable to remain registered, and… are not able to continue to interact with HMRC.”
With the requirement set to come into force on 1 May, Mr Tomlinson said he recognised it was “really important to get the guidance published very soon, and I will be working with officials on that”.
He added: “It will be published in the coming weeks, to give advisers time to prepare. More broadly, it is worth noting that HMRC, alongside what is detailed in the bill, has a public law duty to be reasonable in the way that it engages with individuals, and it will of course adhere to that.”
The committee also passed changes to ensure that HMRC can publish the details of legal professionals involved in designing tax avoidance schemes.
Mr Tomlinson said: “A very small number of legal professionals have become involved in the promotion of tax avoidance schemes. They are sometimes involved in designing schemes, including by providing questionable legal advice to promoters of the scheme on the scheme’s efficacy.
“That legal advice can sometimes be used to help market the scheme to taxpayers, as it is held up as showing that the scheme works and is above board. In reality, however, these schemes rarely work and the scheme users end up footing an unexpected tax bill.”
Although existing legislation allows HMRC to publish the details of some legal professionals, HMRC cannot do so when the legal professional’s role is limited to activity subject to legal professional privilege.
“That prohibits HMRC from publishing the details of legal professionals who design schemes but do no more than that,” the minister said. “These clauses amend the publishing legislation to allow HMRC to publish the details of legal professionals in those circumstances.”
Conservative Mark Garnier, the shadow economic secretary, said his party supported the aim of the clauses.
He said: “Clause 206 allows lawyers to make a formal declaration of material protected by legal professional privilege that may support HMRC’s investigations. That means that the vast majority of lawyers will be able to flag concerns and demonstrate compliance with HMRC without breaking that privilege.
“At the same time, clause 207 introduces a penalty of £10,000 for a lawyer who makes a deliberately false declaration in an effort to cover their involvement in the promotion or marketing of tax avoidance, although I cannot imagine a situation where a lawyer would do anything that was not 100% honest.
“The clauses work well together, and there is widespread agreement from those in industry about the positivity of the changes. We certainly agree with industry that these are good measures.”
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