Who, why or what is a "professional adviser"?This question has been vexing the minds of the good people of UHY Hacker Young, as they ponder HMRC's definition of "reasonable care".
UHY Hacker Young believes that taxpayers could be fined for innocent mistakes on their returns, despite HMRC promises that people who took "reasonable care" would not be fined.
Could it be that Hacker Young don't trust HMRC?
Surely not!
Simon Newark, the firm's VAT partner, told the Telegraph that HMRC defines reasonable care as taking advice from a tax professional.
This means that the majority of high street accountants would be excluded, as they are not "tax professionals" in the strict sense of the term, even though they are the main source of advice and help for many taxpayers.
HMRC have provided a rather slippery answer:
"We cannot and do not specify that an adviser should have certain qualifications. That is for the taxpayer to consider when choosing who to seek advice from."
At first glance that may seem reasonable. However, it leaves HMRC with the final decision as to whether the person from whom the advice was taken was qualified enough and as such whether the taxpayer took "reasonable care".
In other words HMRC are loading the dice in their favour, by not giving and equivocal "yes" or "no".
Mr Newark agrees, and told the Telegraph that:
"The 'reasonable care' clause was clearly not given proper consideration and is causing much confusion rather than making things easier."
Until HMRC provides an equivocal "yes" or "no" answer, people will have to trust HMRC to judge them fairly in the event a dispute arises.
Hands up all of you who trust HMRC? (Certainly not the staff I would warrant).
Tax does have to be taxing.
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As an accountant, you must be well aware that defining anything too narrowly is dangerous (no quantitative definition of "materiality" in auditing standards, for example!) and that if HMRC were to give a clear "Yes or no", loopholes would immediately be found and exploited. As someone who, I'm sure, pays the right amount of tax at the right time, I have no doubt you would be disappointed if tax evaders, having cheated YOU out of tax, got away without being penalised purely because their accountant/lawyer were able to wriggle around the penalties legislation!
ReplyDeleteFurthermore, there is an enormous number of hard-working, skilled and honest tax advisors who do not have professional qualifications nor membership of one of the accounting bodies. Do you want HMRC to put them out of business by ensuring that their clients are seriously disadvantaged in any case where penalties are considered?