In July 2025, the government published draft legislation for Finance Bill 2025/26 that:  

• Introduces a legal requirement for tax advisers who interact with HMRC on behalf of clients to register with HMRC and meet minimum standards. The new requirement will apply from 1 April 2026, subject to a transitional period of at least three months.
• Significantly lowers the bar for HMRC to investigate tax advisers and introduces new sanctions including penalties calculated by reference to potential lost revenue.
• Introduces a strict liability criminal offence for failure to disclose a tax avoidance scheme.  

The government’s proposals are explained in more detail in the earlier articles Have your say on draft Finance Bill legislation | ICAEW and HMRC turns the screw on tax scheme promoters | ICAEW. 

ICAEW’s Tax Faculty has responded to the technical consultation on the legislation in ICAEW REP 69/25 (agent registration), 70/25 (agents facilitating non-compliance) and 71/25 (promoters). ICAEW’s key concerns are summarised below.  

Missing the target 

Although ICAEW supports the government’s policy objective of improving standards in the tax market and driving out the “bad actors”, it does not believe that the legislation, as currently drafted, will meet these objectives. 

ICAEW is concerned that the measures will miss the target and instead impose considerable extra burdens and costs on the vast majority of tax professionals doing a good job. This risks: 

• making tax advice unaffordable or inaccessible for businesses and other taxpayers;
• undermining the UK’s long-term tax compliance culture; 
• harming the perception of the UK tax system; and
• weakening the UK’s professional and business services sector. 

Mandatory agent registration 

ICAEW is concerned that the agent registration amounts to quasi regulation by HMRC. To apply for registration, the tax adviser must meet three eligibility conditions, A-C, of which condition B is the HMRC standard for agents. Monitoring of whether that condition is being met allows for monitoring and enforcement against a standard. HMRC has a clear conflict of interest in this role. In addition, the process lacks the necessary independence that is normally associated with regulation as the investigating officer also makes the decision to suspend registration.  

ICAEW has also raised a number of points around the practical application and implementation of the legislation and has recommended that it is significantly rewritten. Given this, and that the new requirement will come into force at the same time as Making Tax Digital for income tax begins to be phased in, ICAEW has called for agent registration to be deferred until April 2027.  

Agents facilitating non-compliance 

ICAEW is concerned that: 

• the legislation is not limited to deliberate misconduct by tax agents and would capture a very wide set of circumstances where there has been a loss of tax revenue including differences in legal interpretation; 
• the “reason to suspect” bar for issuing a file access notice is too low and could harm the perception of the UK tax system, with negative consequences for inward investment;
• there is a difference in treatment for those who operate with legal professional privilege; and
• calculation of penalties by reference to potential lost revenue will mean that taxpayers with large tax liabilities may be unable to access tax advice as advisers will consider the risk too high. 

To address these concerns, ICAEW suggests that the legislation is reframed to only catch actions that amount to misconduct. In addition, the revised legislation should ensure that agents can take all reasonable steps to preserve confidentiality and that penalties are either proportionate fixed sum amounts or linked to a tax adviser’s fees. 

Promoters of marketed tax avoidance 

Under the government’s plans, the disclosure of tax avoidance scheme (DOTAS) rules will be strengthened and expanded. This will include introducing a new strict liability criminal offence for failure to disclose. However, ICAEW believes that the non-specific nature of the DOTAS regime makes it unsuitable for criminal sanctions.  Advisers may over disclose, resulting in potential conflicts with their duties to clients which could reduce and possibly negate the current effectiveness of the regime. 

In addition, ICAEW is concerned that the introduction of a strict liability criminal offence will create a strong incentive for tax advisers to move from accounting firms into law firms for fear of HMRC over-reach with the new powers, removing diversity and choice from the tax advice market. ICAEW has made a number of suggestions for how the potential application of the offence could be limited to prevent harm to the wider tax advice market. 

Next steps 

ICAEW has offered to continue to engage with the government to ensure that burdens on compliant agents are proportionate and that the measures support the role they play in improving tax compliance. ICAEW has requested another round of technical consultation on a revised draft of all three sets of measures ahead of the publication of the Finance Bill 2025/26.  

Further information 

• Challenging times for HMRC and agents | ICAEW