Registration of tax advisers with HMRC

At the November 2025 Budget, HMRC announced that it would introduce rules to require tax advisers to register with HMRC and meet certain minimum standards in order to interact with HMRC. Draft legislation has since been introduced in the Finance (No 2) Bill Part 7 and schedules 19 and 20. Importantly, the definition of “tax adviser” for the purposes of these new rules is widely drawn and will impact not just tax advisers in traditional law firms and accountancy practices, but also in-house tax (and other) teams which interact with HMRC. The new rules are intended to come into effect from May 2026 with at least a three month transition period. HMRC has promised to publish further details on registration timelines and transition arrangements for specific groups of tax advisers in advance of May 2026.

Despite HMRC’s assurance that the impact on businesses should be negligible, these new requirements will add significant new administrative burdens on a wide-range of businesses that would not normally see themselves as “tax advisers”. All businesses with any in-house function (or even dealing with HMRC on run of the mill tax filings (such as PAYE returns) may be brought within scope where their activities involve any form of interaction with HMRC on behalf of others. The rules will also apply to non-UK tax advisers. The consequences of failing to comply may be significant, including significant penalties on both the tax adviser organisation and individuals within that organisation.

What is a tax adviser?

Under clause 221, a tax adviser means (a) an organisation that, in the course of a business carried on by it, assists other persons with their tax affairs or (b) an individual who, in the course of a business carried on as a sole trader, assists other persons with their tax affairs. Assisting others with their tax affairs is widely defined to include advising on tax, or acting as a tax agent or providing any assistance with any document likely to be relied on by HMRC. Equally, “organisation” is defined widely (and in a somewhat circular manner) as any body corporate, partnership or other organisation carrying on business. HMRC guidance would certainly be welcome on this aspect of the definition as it is not entirely clear whether “organisation” might encompass parts of a business, such as branches or divisions.

These definitions are somewhat imprecise but intentionally wide and can be interpreted as applying to many in-house tax (and other) functions which interact with HMRC in relation to any other group organisation’s tax affairs. It may include any centralised in-house tax team serving multiple group members or any in-house asset management tax team advising on or preparing tax documentation for investors or funds, for example. It may also cover payroll professionals based outside of the tax team.

It should be noted that it is not necessary that the tax adviser have any tax qualification or that the business carried on is that of a tax adviser. Any persons providing any advice on tax filings (for example PAYE returns) would qualify as a tax adviser for these purposes. Where an individual works for a tax adviser and interacts with HMRC in the course of a business carried on by that tax adviser, the interaction is regarded as carried out by the tax adviser. The rules apply even where the tax adviser and/or the client are outside the UK.

However, the registration requirements are predicated on their being a “client” for the tax adviser. Therefore, provided that all the advice that is provided is for the same entity or organisation which the tax adviser works for, then it would appear that the rules would not apply (subject potentially to clarification from HMRC over the extent to which an “organisation” might include parts of a business, such as a division or branch).

Group company exception

Schedule 19 does include a limited exception where the tax adviser interacts with HMRC in relation to a client who is a group undertaking in relation to the adviser. That is a client that is a member of the same group of companies, but in this case the legislation uses the Companies Act definition of “group undertaking” which focusses on voting rights and ability to appoint directors rather than beneficial ownership. Therefore, where the tax adviser only provides advice in-house for the same entity and its group companies, then this exception should prevent the need to register.

However, care will need to be taken that advice (any tax advice or assistance) is not provided to any non-group entity. For example, if tax advisers within an asset manager provided tax assistance for a fund or if an in-house tax function provided tax assistance for joint venture vehicles or minority investments, they would fall outside the exception. It would appear that, as things stand, any non-group tax advice would remove the exemption, however minor.

Consequences

Clause 220 will prevent any unregistered tax adviser (who is required to register) from interacting with HMRC. That includes contacting or attempting to contact HMRC by phone, mail or email, sending a message through a website or internet portal, filing any returns, claims, notices or any other documents or communicating with HMRC in any other way.

Where HMRC become aware that an unregistered tax adviser is communicating with HMRC, then they may issue a compliance notice under Clause 230. If a tax adviser has been given a compliance notice and subsequently contravenes that notice by communicating with HMRC then HMRC may issue fines of £5000 or (for repeated contraventions) £10000 on the tax adviser or a relevant individual within the tax adviser. In addition, HMRC will issue temporary or permanent ineligibility orders preventing the tax adviser or relevant individual registering with HMRC. A tax adviser must notify its clients of the existence of any suspension or ineligibility order.

Relevant individuals are defined as:

• For an organisation with fewer than six officers, (i) each officer and (ii) each individual who works for the tax adviser and plays a significant role in making decisions about, managing or organising the tax adviser activities plus each officer who does not perform such a role;
• For an organisation with six or more officers, each individual who works for the tax adviser and plays a significant role in making decisions about, managing or organising the tax adviser activities plus, if the organisation has fewer than five officers within that description, each officer nominated by the adviser to be compliant with its registration requirements (see below).

There is a defence of reasonable excuse to the imposition of penalties.

Registration conditions

Clause 222 sets out the application process for tax advisers to register with HMRC. The clause presupposes that HMRC will publish a notice setting out different types of information required for different descriptions of tax adviser. In particular, the application process must contain a statement that the tax adviser meets the registration conditions or explaining why they are not met. Clause 224 sets out three registration conditions.

Condition one is that the tax adviser, or if it is an organisation, each of the adviser’s relevant individuals, essentially has a clean bill of health with HMRC. This involves not having overdue returns or tax, not being subject to anti-avoidance measures, suspensions, ineligibility orders, director disqualification, insolvent or an unspent conviction.

Condition two is that the adviser is registered with a supervisory authority for anti-money laundering purposes or meets any conditions set out by HMRC in a notice about applying to register with a supervisory authority for those purposes.

Condition three is that if the adviser is an organisation with fewer than five officers who play a significant role in making decisions about the tax adviser activities of the organisation, then the adviser nominates as many officers to be relevant individuals as are necessary to ensure that the adviser has at least five relevant individuals who are officers.

It should be noted that the tax adviser activities are not defined for these purposes, but in practice we would expect relevant individuals to potentially include (depending on the exact circumstances): heads of tax; senior tax professionals; company directors and other corporate officers; partners; and any other individuals who carry out management functions.

Affected businesses will need to appraise their existing tax (and non-tax) functions to determine who will qualify as relevant individuals for these purposes. This may not be straightforward, particularly in large organisations with complex structures. In particular, it is important to note that the conditions which need to be met for a tax adviser to make the necessary statement on its registration application apply not just to the tax adviser business but also the relevant individuals in that business in their personal capacity. This may require businesses to undertake due diligence on the personal affairs of their officers and staff beyond what is necessary in other contexts.

It should also be noted that HMRC will be able to monitor continual compliance with the conditions on an ongoing basis (Clause 228). This means that the internal due diligence processes put in place for registration may also need to be maintained on an ongoing basis. Indeed, HMRC’s Budget publications indicate that they will introduce an annual assurance requirement that minimum registration conditions, including AML supervision status, are met.

Take away

Despite HMRC’s assurance that the measure will have “negligible impact on tax adviser firms who engage with HMRC”, the rules clearly have the potential to require significant administrative engagement for tax advisers (including those who would not naturally see themselves as tax advisers). This will include initial familiarisation with the (somewhat opaque) rules, determining the extent to which they are caught (or may in future be caught) by the rules (especially in the case of in-house functions), due diligence on relevant individuals at the outset and on a continuing basis to provide HMRC with the annual assurances of HMRC’s minimum registration conditions. There is some potential for harmonisation of registration requirements through a single digital route using the new registration requirement by larger firms, but this is unlikely to be the case for in-house operations.

It is to be hoped that HMRC guidance, when it is forthcoming will provide some much needed clarity on the detailed application of the rules but in the meantime, business should now be considering any actions that they can take in advance of the rules coming into force. These may include:

• Considering the existing scope of any tax adviser activities currently undertaken and whether these include any external clients
• Considering whether the group company exception applies to the activities undertaken
• Consider whether any new governance processes are required, whether to ensure that no external advice is provided outside the exceptions or to monitor and control contact with HMRC by unregistered advisers
• Identify the relevant individuals in the tax adviser for the purposes of the rules and consider whether there will be a requirement to nominate additional officers to act as relevant individuals
• Consider whether the registration conditions can be met, which may involve carrying out due diligence into the personal tax affairs of relevant individuals
• Annual monitoring of HMRC compliance process