The Government is consulting on plans to raise standards in the tax advice market until tomorrow (Wednesday 28 May 2024).
The plans are designed to combat the minority of tax practitioners who are incompetent, unprofessional or unscrupulous who continue to operate, harming their clients and public finances.
HMRC has proposed three options to address the problem. These are:
1) to introduce compulsory membership of a recognised professional body
2) joint HMRC/industry enforcement or
3) regulation by a separate statutory government body.
Last week, the Society of Pension Professionals (SPP) responded to the consultation stating that they share the government’s commitment to making the tax system fairer and simpler and to monitor and enforce minimum standards for tax practitioners but added, “There is a tangible risk of pensions professionals, who are not the intended target audience for these proposals, being inadvertently captured by the proposed new regulatory regime.”
The SPP response explains the potential for unintended consequences as, “…pension professionals are likely to deal with many tax related matters e.g. lump sum allowances, tax free allowances, death benefits etc. these almost exclusively fall into either giving information, i.e. communicating entitlements and broadly explaining the implications in terms of key facts etc., or processing an event, rather than the advice category rather than offering individualised advice…given the often sizeable sums of money involved and the fact savers will frequently rely on the information provided to help inform their decisions, clear definitions as to what constitutes tax advice and precisely where the tax advice/guidance boundary falls will be essential.”
The SPP have suggested that to avoid these unintended consequences, an exemption is needed for pensions matters relating to tax. The SPP have also urged HMRC to discuss these proposals with The Pensions Regulator – something that has not yet happened.
SPP member and LCP Principal, Tim Box, said,
“It’s clear that pensions professionals are not the intended target of these proposals but with more than 35 million pensions being administered in the UK, the potential impact of unintended consequences is considerable. That’s why SPP is recommending an exemption for relevant pensions work.”
