Non-compliant umbrella companies should be included in the government’s plans to improve the standard of the tax advice market, according to the Chartered Institute of Taxation (CIOT).
The CIOT has called on HMRC to broaden their definition of “tax advice” to include umbrella companies and tax software providers in their consultation on “Raising standards in the tax advice market”, stating that a wider definition is vital to raising standards and enabling redress when problems arise.
HMRC has previously stated that it will use this latest consultation to seek views on its proposals to introduce a requirement for tax advisors to hold professional indemnity insurance (PII), including minimum levels of cover and a definition of tax advice.
While CIOT supports these proposals, it has urged the government to go one step further and include umbrella companies in the wider definition, thus ensuring that temporary workers are protected from non-compliant firms.
Commenting on the consultation, John Cullinane, CIOT’s Director of Public Policy, said: “A wide definition of tax advice is vital to help HMRC use compulsory PII to raise standards across the tax advice market, improve the public’s trust in tax advice and enable taxpayers to have redress when things go wrong.
“A widely drawn and principles-based definition of tax advice is essential if compulsory PII is to achieve its purpose. If a provider of advice can be sued for the losses that their mistakes cause clients, then it is wrong if the client cannot be compensated because they do not have the funds to pay out. That is why they should be insured.”
Author: Steven English