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The government is preparing to consult on plans to make professional indemnity insurance compulsory for tax advisers.
The government is due to consult on introducing a requirement for all tax advisers to hold professional indemnity insurance, based on data it collected during a call for evidence launched at March budget 2020.
The call for evidence attracted 83 written responses as well as input from 22 virtual roundtables, and pointed to many potential benefits, including driving up standards and potentially removing from the market those advisers who were unable, as a result of riskier practices, to get insurance.
The call for evidence followed Sir Amyas Morse’s independent review into the Loan Charge in 2019, which highlighted the need for the government to look at ways to improve the tax advice market and take further steps to tackle the promoters of loan schemes.
In response, in March the government published a call for evidence into raising standards in the tax advice market. In doing so, the government’s aim was to help taxpayers to make informed decisions when seeking tax advice, providing them with reliable reassurance that the advice they receive is competent, professional and trustworthy.
“Many tax advisers are technically competent and adhere to high professional standards. However, responses from across the sector have confirmed that the market for tax advice is not working as well as it should be,” Jesse Norman, the Financial Secretary to the Treasury said in the government’s summary of the findings.
“Some advisers are incompetent, and some actively bend or break the rules. We know that this is a complex market, and any potential solutions will need careful consideration.”
The government will, therefore, consult in particular on a new measure: making professional indemnity insurance compulsory for tax advisers, as a way of providing recourse, protecting consumers, and raising standards in the tax advice market.
The consultation will also seek views on defining tax advice, as the government recognises the importance of applying the standards expected to the right activities.
“Our goal is simple: to support taxpayers, and to curb tax avoidance and the promotion of tax avoidance,” said Mr Norman.
Alongside this, the government underlined it would continue to work in partnership with adviser professional bodies to understand the role they play in supervising and supporting their members and raising standards in the profession.