In its response to the consultation Raising standards in the tax advice market, the NI Tax Committee stresses the need for any mandatory Professional Indemnity Insurance (“PII”) requirement to be carefully introduced given concerns that premia could increase for affiliated tax advisers as a way of spreading the higher risk from unaffiliated agents across the whole tax advisers market. This consultation focused on two aspects of this ongoing project; mandatory PII and the definition of tax advice.

Overall, the Committee made the following key points in its submission:-

• Mandatory PII could lead to an increase in premia – smaller firms and sole practitioners providing tax services could be priced out of the market which could lead to even more taxpayers seeking assistance from rogue agents or completing and submitting their own returns which is not desirable given the complexities of UK tax legislation. This is of particular concern in the NI market;
• In introducing a mandatory PII requirement for tax advisers, the Government has a vital role to play in its discussions with PII insurers. An independent Tax Advisers PII Adjudicator should be established for the affiliated sector;
• The PII cover for an unaffiliated tax adviser should be higher than that required currently at the highest level by any of the Professional Bodies (which is expected of practising members of Chartered Accountants Ireland) and gross fee income could be used as an appropriate measure to stage mandatory PII;
• For affiliated agents, the burden should fall on HMRC to check and place reliance on the searchable online databases of Professional Bodies when establishing if PII is in place. Where an adviser is not affiliated, the burden of proof should fall on the adviser;
• Any PII enforcement options should apply to unaffiliated advisers;
• Access to enhanced online services should be provided to those who are affiliated members of Professional Bodies with the appropriate level of PII;
• The definition of tax agent in Section 38 Finance Act 2012 (dishonest conduct legislation) feels pitched at the right level in the context of the definition of tax adviser and thus tax advice;
• HMRC should develop an overall consumer protection strategy combining mandatory PII with other measures; and
• The Office of Tax Simplification should be tasked with carrying out a review of income tax complexity in particular given the proposed extension of MTD to income tax from April 2023.