The Association of Accounting Technicians (AAT) has said it has welcomed the government’s decision that it will not be proceeding with the introduction of a requirement for tax advisers to hold Professional Indemnity Insurance (PII).
It comes after the government published a consultation on whether to make professional indemnity insurance (PII) compulsory for tax advisers, and a definition of tax advice in March earlier this year.
It said the rationale for introducing a requirement for tax advisers to hold PII was that it would “help to create better market incentives for poor performing advisers to improve standards”, adding that it would also “protect consumers by giving them greater access to recourse against the providers of bad tax advice”.
However, following responses to the consultation launched at the time, it said compulsory PII on its own “would not be an effective mechanism to raise standards across the market nor would it have a meaningful impact on consumer protection and the ability for consumers to secure redress”.
Adam Harper, director of Professional Standards and Policy, AAT said that the association welcomed the news and that it had “long campaigned” against the move.
He said: “Unregulated tax advisers account for the majority of agent-related complaints to HMRC as well as contributing to tax evasion and money laundering activities. Additionally, their mistakes and errors leave many taxpayers facing large and unnecessary fines and penalties, whilst also costing the Exchequer hundreds of millions of pounds a year through overclaiming or wrongly claiming various tax reliefs.
“If the government is serious about tackling these problems, then it should make membership of a professional body mandatory for anyone offering paid-for tax and accountancy services. AAT has been campaigning on this issue for many years and is supported by the public and our members on this, as well as by over three-quarters of MPs.”
He added: “AAT will be responding to the government’s consultation on improving the wider regulatory framework supporting standards in tax advice next year and welcomes the opportunity to do so. However, we are disappointed that time has been wasted considering the inadequate proposals in the 2021 consultation when a ready-made solution exists.
“In the meantime, especially ahead of the self-assessment deadline in January, we would encourage everyone to ensure that they get paid-for tax advice from a member of a relevant professional body, to ensure they receive the most up-to-date and accurate advice for them.”