This article, "Qualified by examination: Why it matters," originally appeared on AccountingWeb.com.
Since the publication of HMRC’s consultation on raising standards in the tax advice market – strengthening the regulatory framework and improving registration, tax advisers and agents up and down the country have been weighing up the potential impact that the proposals could have on them and their businesses.
One consideration causing concern is whether mandating membership of a recognised professional body would represent effective, proportionate and reasonable action to raising standards in the tax advice market.
Outside of the tax profession, many people assume that the tax advice market (and its practitioners) is already regulated in a comparable way to auditors, solicitors and independent financial advisors. However, as readers of AccountingWEB know only too well, this assumption is incorrect, and at present anyone can set themselves up as a tax practitioner and provide tax advice to clients with little or no oversight. The question to be answered is therefore is this position acceptable, and right? Or should the public, in line with their understanding, rightfully expect and receive greater accountability and equality in standards from tax advisers?
No surprise
It will not surprise readers that, as a member of both the Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CIOT) for over 20 years, I am a firm advocate for professional qualifications and membership participation. That said, I also recognise that being exam qualified and a member of a professional body does not in itself mean that those members automatically have higher standards than members who are qualified by experience (QBE).
However, membership of a professional body such as the ATT gives the public some comfort that its members are complying with the rules and regulation and, if not, that there are avenues for redress.
Is AML oversight enough?
Some will argue that the monitoring by HMRC for anti-money laundering (AML) purposes of QBEs is sufficient oversight, and that mandatory membership of a professional body is just creating more admin and costs. However, as readers will be aware, AML compliance is about understanding the people that tax advisers and agents interact with, whereas professional regulation is about the competency and accountability of the advisers themselves.
Professional qualifications
The ATT exams are designed to test people’s knowledge of taxation using practical everyday questions and scenarios. Therefore, for competent QBEs, sitting the ATT exams should not be a challenge, and could result in gaining new insights and knowledge that could be used elsewhere within their business.
There are those who query what difference a professional qualification makes, especially if it was attained a long time ago?
Professional qualifications are only part of the entry requirements into professional body membership. Most professional bodies also require would-be members to have appropriate levels of practical experience and once they are a member keep their knowledge up to date. The ATT, for example, requires at least two years’ relevant practical experience to become a member, and once a member there are yearly compulsory professional development (CPD) requirements to show that members have maintained and developed the skills and competencies necessary to carry out their professional and technical duties.
Professional conduct
Professional bodies also have an array of professional rules and practice guidelines that members will be required to adhere to. Additionally, seven professional bodies have created the Professional conduct in relation to taxation principles which require members to commit to the highest standards of professional conduct. These rules and guidelines ensure standards are upheld and members are accountable for their behaviour and actions. Failure to abide by these rules can result in disciplinary action, with sanctions ranging from financial fines or an admonishment through to suspension or expulsion.
I appreciate that attaining qualifications and maintaining membership standards takes time and effort as well as incurring financial costs, but there can be great benefits to being qualified and participating in all that professional bodies have to offer.
Having membership allows members the use of designatory letters that show the world their credentials. There is also access to a like-minded community of professionals, publications, webinars, conferences, branch events and technical assistance.
How to respond
Finally, the subject of regulating the tax advice market is unlikely to go away. If you have concerns about the direction of travel, I encourage you to engage fully with this consultation and make your views and feelings known to HMRC by emailing [email protected] by the closing date of 29 May 2024.
Remember, this is only a stage one consultation, so everything is up for debate and discussion and nothing is settled, but the findings will inform whether the government pursues the introduction of mandatory professional body membership or whether another approach, such as regulation by a government body is adopted. The status quo does not appear to be an option.