HMRC expects!

Most practitioners will be aware that HMRC’s conduct and service standards are set out in a charter (‘Your Charter’), which is displayed on the GOV.UK website ( There is a statutory requirement for Your Charter to ‘…include standards of behaviour and values to which [HMRC] will aspire when dealing with people in the exercise of their functions’ (CRCA 2005, s 16A(2)).

HMRC’s expectations of agents

It is perhaps less well-known that HMRC has set conduct standards for agents: ‘HMRC: the standard for agents’ (‘the standard’). The standard ( was originally published in August 2016 but was updated earlier this year to include requirements for providing advice on tax planning. Conceptually, the standard is not dissimilar to Your Charter. However, unlike Your Charter there is no statutory basis for HMRC to impose and administer the standard; HMRC does not have the power to regulate agents.

HMRC recognises that many tax agents and advisers are affiliated to the main professional bodies (ie HMRC estimates that approximately 70% of agents are members of professional bodies such as the ICAEW and CIOT), who are therefore subject to the Professional Conduct in Relation to Taxation (PCRT) standards set by those bodies. HMRC’s standard is described as ‘a minimum standard’ for all agents, but particularly for those who are not affiliated to a professional body that has adopted PCRT.

The standards

The standard has two separate sets of requirements. These are contained in a general standard and a tax planning standard. The general standard has three separate elements:

  1. Integrity – HMRC expects agents to be ‘straightforward and honest’ with HMRC.
  2. Professional competence and due care – this requires (among other things) that agents: keep up-to-date in terms of tax knowledge in the areas of tax they deal with; do not include figures in tax returns or claims which are unsustainable; and that agents advise clients to correct matters where errors are found in a client’s tax affairs.
  3. Professional behaviour – this includes complying fully with tax law and regulations relating to the agent’s professional activity (eg money laundering) and dealing ‘courteously and professionally’ with HMRC staff.

These three headings are taken from PRCT, but HMRC’s version of these elements in the standard is more expansive than in PRCT. This arguably increases the requirements placed upon agents, although HMRC states: ‘If agents meet the PCRT standard, HMRC does not envisage that our, much briefer, summary of certain important principles will place further requirements on them.’

PCRT has two further fundamental principles, namely objectivity and confidentiality. However, HMRC has excluded them from the standard, on the basis that they are fundamental to the agent-client relationship, as opposed to interactions between agents and HMRC.

The tax planning standard has the following four elements:

    1. Lawful – HMRC states: ‘Tax planning should be based on a realistic assessment of the facts and a credible view of the law.’
    2. Disclosure and transparency – agents must ‘represent all relevant facts fairly.’
    3. Advising on tax planning arrangements – HMRC states: ‘Agents must not create, encourage or promote tax planning arrangements or structures that:
      • set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation;
      • are highly artificial or highly contrived and seek to exploit shortcomings in the relevant legislation.’

      This requirement adopts the wording of the standard in PCRT, and therefore should not impose any additional requirements for members of professional bodies that have adopted PCRT.

    4. Professional judgement and appropriate documentation – HMRC expects agents to keep timely notes of the rationale for judgements exercised in seeking to adhere to these requirements.

HMRC is watching

Some practitioners have speculated that HMRC has a ‘points system’, in which agents or professional firms with a high proportion of non-compliant taxpayers, and/or whose work is considered by HMRC in its dealing with the agent or professional firm to be sub-standard, have points allocated against them; when a certain number of points is exceeded, the agent or firm is subject to close scrutiny by HMRC, and/or possibly an investigation. My understanding is that HMRC has previously denied that such a points system exists.

However, the standard admits that HMRC collects evidence of sub-standard agent behaviour in the course of its day-to-day compliance activity. HMRC points out: ‘as we use our data more effectively…we will improve our ability to identify instances of poor tax agent standards.’ HMRC expects all agents to keep to the standard, irrespective of whether they are a member of a professional body.

Sanctions against agents

If HMRC’s standard for agents is breached, there are several possible sanctions (these are described as ‘powers’, although as mentioned there is no statutory basis for the standards as such, including most of HMRC’s sanctions for breaching them). Those sanctions range from ‘constructive conversations with agents’ at one end of the scale, to pursuing criminal cases at the other. HMRC also has powers to penalise tax agents who engage in dishonest conduct, including a penalty of up to £50,000, the publication of the agent’s details, and a right of access by HMRC to the agent’s files (FA 2012, Sch 38).

Furthermore, HMRC can report cases of suspected misconduct to the agent’s professional body (if they are affiliated to one) to investigate further and consider possible disciplinary action. HMRC may also refuse to deal with a tax agent, or suspend an agent’s access to certain online services.

A level playing field?

Some practitioners may feel that it is ‘a bit rich’ for HMRC to seek to impose a standard on them. I have seen views expressed along the lines that HMRC should ‘get their own house in order’ before setting standards for agents.

Personally, I have no problem with HMRC’s standard for agents, as its requirements are not unduly onerous or unreasonable. However, it does seem that there is a big difference in accountability and sanctions between HMRC and agents.

For example, a taxpayer’s (or agent’s) recourse when HMRC’s standards fall below the standards set in Your Charter is to make a complaint to HMRC (, or possibly to the Adjudicator’s Office or Parliamentary Ombudsman in appropriate cases. A favourable outcome might be an apology and possibly a (relatively modest) monetary award of compensation. By contrast, if an agent’s conduct falls below the standard expected by HMRC, as mentioned this could result in HMRC refusing to deal with the agent, which could effectively put the agent out of business.

Nevertheless, HMRC’s standard for agents exists, and agents who ignore it do so at their peril.

Mark McLaughlin CTA (Fellow) ATT (Fellow) TEP is a tax consultant to professional firms ( and, co-founder of TaxationWeb ( and Editor of McLaughlin’s Tax Case Review (

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Written by Ellie MacKenzie

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