Mandatory tax adviser registration commences in May…but that’s not the only thing tax advisers should be worried about

In this article, Leontia Doran, UK Tax Manager, takes a look at the background to and the key aspects of the draft legislation which later this year introduces a legal requirement for tax advisers to register with HMRC, in addition to other significant changes which will affect the tax advice market.

Background

For several years now HMRC has been conducting a project badged as ‘Raising standards in the tax advice market’ which as a core objective aims to remove incompetent or unscrupulous practitioners from the UK tax advice market, thereby enhancing consumer protection and improving the overall quality of advice. Key goals include reducing the tax gap, increasing trust in tax advisers, and strengthening HMRC’s regulatory oversight.

In May 2024 as part of this project, HMRC consulted on the following three potential options to strengthen the regulatory framework in the tax advice market:

mandatory membership of a recognised professional body,
joint HMRC and industry enforcement, and
regulation by a separate statutory government body.

In the same consultation, improvements in how tax practitioners register with HMRC also featured. Chartered Accountants Ireland’s response to this consultation is available in the 2024 Tax Representations section of our website.

Autumn Budget 2024 announcement

Just five months later the Government announced in its first Budget that from April 2026 it would mandate registration of tax advisers who interact with HMRC on behalf of clients. However, that consultation response was silent on any new measures to regulate the UK tax advice market. In the meantime, discussions continued between HMRC and stakeholders on the raising standards project and the potential regulation of tax advisers.

Subsequently, on Legislation day in July 2025, the draft legislation for mandatory tax adviser registration was published for consultation, the Institute’s response to which can be read in the 2025 Tax Representations section of our website.

Stakeholders, including this Institute, raised serious concerns in their consultation responses to the draft legislation, including that it would be a form of quasi-regulation as it stood, that it was very broadly drafted and contained insufficient safeguards, in addition to there being too little time to prepare. As a result, many recommended that it be delayed and significantly redesigned.

Autumn Budget 2025 announcement

Fast forward to Budget Day in November 2025 when it was confirmed that the Government was not proceeding with options to regulate tax advisers but would instead ‘work in partnership with the sector to raise standards’ via the following measures:

mandatory agent registration,
enhancing HMRC’s powers and sanctions against tax adviser facilitated non-compliance, and
closing in on promoters of marketed tax avoidance.

A short delay to mandatory tax adviser registration to 1 May 2026 was also announced which was followed by revised draft legislation for this measure when the Finance Bill was introduced to parliament. This includes a slightly narrower definition of tax adviser which had been one of our key recommendations.

The content herein is based on the draft legislation in the Finance Bill at the time of writing which may change as it proceeds through the parliamentary process ahead of Royal Assent.

Enhanced HMRC powers to sanction tax advisers

The mandatory registration measure sits alongside draft legislation which will take effect from 1 April 2026 that will also implement enhanced powers for HMRC to sanction tax advisers who deliberately facilitate client non-compliance. These will specifically:

allow HMRC to obtain information from tax advisers using a file access notice where there is reasonable suspicion that they have deliberately facilitated non-compliance in their clients’ tax affairs,
remove the requirement for tribunal approval before issuing a file access notice, replacing it with a senior HMRC officer approval mechanism (however, where a file access notice is approved by HMRC it will be appealable to the tribunal),
revise the penalties for failure to comply with a file access notice to include where inaccurate information is provided, and allow HMRC to increase the penalty amounts with tribunal approval,
introduce a new penalty framework to sanction tax advisers who are found to have deliberately facilitated non-compliance in their clients’ tax affairs. The existing maximum penalty of £50,000 will be replaced with a potentially uncapped penalty, calculated by reference to the potential lost tax revenue of the tax adviser’s client who the behaviour is linked to, and
introduce new powers to publish information about tax advisers where HMRC has used relevant sanctions. This will be mandatory should a penalty of more than £7,500 be charged.

These reforms essentially broaden the scope of what was previously “dishonest conduct by tax agents” to “deliberate conduct by tax advisers”.

Prohibition of promotion of tax avoidance arrangements

Additional new powers will also prohibit the promotion of tax avoidance arrangements which includes a strict liability criminal offence that will apply to those promoting these arrangements.

These particular new powers will take effect two months after Royal Assent of the Finance Bill and are drafted in very broad terms. In their current form they essentially risk capturing legitimate tax advisers who act reasonably, professionally, and in good faith.

In particular, the new prohibition will be triggered by an evaluation based on whether arrangements have “no realistic prospect” of achieving a tax advantage which might only be possible with hindsight in areas of legal uncertainty.

When combined with the mandatory tax adviser registration requirement and the new sanctions for deliberate behaviour legislation, this may act as a deterrent to tax advisers who provide legitimate tax advice and better choice for consumers in complex and evolving areas of tax law.

Ultimately it may lead to less (and not better) choices for taxpayers and could result in unintended consequences by driving legitimate advisers out of the market which will undermine the wider economic objectives of the raising standards in the tax advice market project.

The remainder of this article looks at the key aspects of the registration requirement in overview.

What does mandatory tax adviser registration mean?

Registration will be required for any ‘tax adviser’ who interacts with HMRC in relation to the tax affairs of their clients, irrespective of where the adviser or the client is in the world or where the services are provided from. The draft legislation defines ‘tax adviser’ as an organisation or individual who, in the course of a business carried on by them, assists other persons with their tax affairs. This is then defined broadly defined to include:

Providing advice in relation to tax,
Acting or purporting to act as an agent on behalf of the other person in relation to tax, or
Providing assistance with any document that is likely to be relied on by HMRC to determine the other person’s tax position.

Interacting with HMRC includes:

Contacting HMRC by telephone, post or email,
Sending a message to HMRC through a website or online portal,
Filing returns, claims, notices, or other documents with HMRC, or
Communicating with HMRC in any other way.

Who needs to register?

Registration is required at firm level. However, certain registration conditions can still apply to individual staff members within the firm and individual officers of the firm (including partners, directors, and LLP members). If a tax adviser operates a sole trade, they will need to individually register in their own name.

There are limited exceptions to the requirement to register. For example, HMRC has already confirmed that those who provide pro-bono tax advice and ‘in-house’ tax advice in their own or their employer’s business are not within the scope of the regime.

The Finance Bill also sets out a limited list of exemptions from registration which includes, inter alia, providers of payroll, tax, or accounting software who interact with HMRC in that capacity, if the HMRC interaction is in relation to an appeal to a court or tribunal, or where the adviser interacts in response to a request by HMRC.

Note that agents who already have an Agent Services Account (ASA) will have to register. However, HMRC has confirmed that there will be a separate lighter touch ‘transition’ process for such agents to onboard onto the new registration system. Details are awaited on what this precisely means and its timeline.

When do advisers need to register?

Registration will commence from 1 May 2026 with a transition period of at least three months for all tax advisers. More time will also be available to those currently registered with HMRC (i.e., those with an ASA) or those who need more time to comply. This will be particularly important for any of our members based in Ireland or overseas and who are within scope. At the time of writing HMRC has not yet made available the precise timetable for registration or how it will determine who needs more time to comply.

How will advisers register?

HMRC has been allocated £36 million to develop a new dedicated online registration system which remains in development and is not yet available. Initial registration and maintenance of a tax adviser’s registration will be free and not subject to a charge.

From recent discussions with HMRC about the new system, it seems that this will involve the existing agent identifying who their relevant individuals are, which will then require those individuals to provide permission for HMRC to share their personal data with their firm if this is related to the registration conditions. The agent will then need to confirm that their firm meets the registration conditions or explain if they do not.

What information needs to be provided when registering?

The exact registration requirements are awaited from HMRC. However, we do know that applications for registration will need to include:

The name and address of the firm,
The name of each ‘relevant individual’ in the firm (essentially, those individuals with responsibility for the tax work undertaken by the firm. However, for some firms the definition may be wider than this as there are minimum numbers of ‘relevant individuals’ who must be named),
A statement that each of the three registration conditions are met (see later), or if these are not, there must be an explanation why, and
Any other information as HMRC may specify in a notice (we are not yet aware what this made be as no such notice has been published at the time of writing). This was another aspect challenged by us in our consultation submission.

Essentially, the number of relevant individuals to be named depends on how many ‘officers’ (company directors, partners in partnerships, and members of LLPs etc.) a firm has. Notably, the draft legislation does not cap the number of relevant individuals at five and the legislation sets out different requirements for firms with five or fewer officers and those with six or more. Detailed examples of this particular aspect will therefore need to be included in the legislation’s accompanying guidance.

What are the three registration conditions?

The three conditions are that:

The tax adviser and each of the relevant individuals:

must not have any outstanding tax returns or payments (unless a time to pay arrangement has been agreed and has not been broken),
is not subject to a decision by HMRC to refuse to deal with them,
is not subject to a relevant anti-avoidance measure,
has not, in the last 12 months, had a relevant anti-avoidance penalty imposed on them,
is not subject to a relevant suspension or ineligibility order,
is not disqualified as a director in the UK, or overseas,
does not have an insolvency practitioner acting in relation to them, and
does not have an unspent conviction for a relevant offence, and

The tax adviser is registered for Anti-Money Laundering supervision (or meets such conditions about applying to register for supervision as may be specified in a HMRC notice, with no such notice yet been published), and
The required number of relevant individuals has been identified .

What happens after a registration application is made?

HMRC will consider the tax adviser’s registration application and will then decide whether or not to approve it at which point the tax adviser will be notified of their decision. If rejected, this can be appealed to an independent tribunal, after a formal internal review has been completed.

If the conditions for registration are met, HMRC must approve the registration. If they are not met solely because the firm or a relevant individual has an outstanding tax return or payment, HMRC can still approve the application if they consider it to be appropriate. These decisions will be based on pre-determined thresholds and circumstances, precise details of which are awaited.

At present we are also not aware of the expected timescale for HMRC to respond to registration applications, despite setting out the importance of this in our consultation submission.

The registration requirement provides HMRC with a range of monitoring and enforcement powers, and sanctions and penalties which can be imposed for non-compliance. The draft legislation also contains a range of safeguards, including appeal rights. HMRC will be able to suspend a tax adviser’s registration in certain circumstances, including if their behaviour does not meet ‘expected standards’ (more detail on this is also awaited which we also highlighted as an area of concern in our consultation submission).

What should tax adviser’s do now?

Preparations should begin now. Tax adviser firms should act as soon as possible to:

Familiarise themselves with the draft legislation and monitor this for any changes. This may necessitate appointing a specific team of individuals within the firm who will be responsible for implementing the legislation and ensuring it is complied with both at the time of registration and in the future,
Identify who their relevant individuals are and how many the rules require them to include in their application,
Determine their registration timeline once available from HMRC,
Audit, check, and document whether or the firm and all relevant individuals will meet the registration conditions and take remedial action where necessary, and
Ensure that the risk of suspension/prohibition, including the impact of this on their clients and how this would be managed is built into the firm’s contingency planning.

Leontia Doran is the Institute’s UK Tax Manager and is a leading advocate on taxation policy for Northern Ireland.