Accountants who provide tax advice may be required to hold professional indemnity insurance (PII) under new laws proposed this week.
The plans come after concerns that rogue tax advisors were often giving incorrect or incomplete advice without a route to redress, resulting in financial loss, and in the worst cases, criminal convictions for clients.
According to the consultation, the Government may introduce a new requirement for tax advisers to hold indemnity insurance with a minimum level of cover.
A minimum level of PII would ensure taxpayers have a method of redress should they receive poor advice.
The consultation will also seek views on the definition of tax advice, proposing that the new definition should be set “as wide as possible” to encompass almost all tax and tax-related work undertaken in the UK.
Commenting on the plans, the Government said there is “a minority of incompetent, unprofessional and malicious advisers whose activities harm their clients, reduce public revenue, and undermine the functioning of the tax advice market”.
Likewise, around 30 per cent of the tax advisory market - around 21,000 tax advisors - are not members of a professional body and, as such, are not required to hold PII.
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As members of the Institute of Chartered Accountants in England and Wales (ICAEW), we are required by mandate to hold more than £1 million of indemnity cover at all times. This ensures that all of our tax clients are protected no matter what. For expert tax advice without the risk, get in touch with our team today.