On the go: The Association of Consulting Actuaries has warned HM Revenue & Customs against causing accidental damage to the pensions advice market.
HMRC is currently consulting on proposals to raise standards in the tax advice market, principally by using personal indemnity insurance as a tool to remove some advisers from the market.
It also means to provide fallback for compensation to customers who have been given poor tax advice.
While ACA broadly welcomed the intent, it warned that this move should not come at the expense of the pensions advice market or the provision of high-quality information to scheme members.
ACA chair Patrick Bloomfield said: “HMRC is looking to find an extremely wide definition of ‘tax advice’. This is understandable as it means promoters of tax-avoidance schemes cannot hide behind a label of offering guidance rather than tax advice.
“However, given the complexity of pension tax rules, such a definition could inadvertently capture a wide element of the industry, helping the day-to-day delivery of pension schemes.
“This could significantly inconvenience scheme members and bring pensions professionals into regulations primarily designed with traditional tax advisers and their clients in mind,” he added.
ACA has suggested ways of better using personal indemnity insurance to achieve HMRC’s desired ends, recommending that any such policy should focus on protecting personal customers and small business customers instead of larger businesses, which it said “already tend to have strong procurement processes”.
Additionally, care should be taken to avoid duplicating equivalent requirements already imposed by professional bodies and statutory regulators, “and construct simple coverage requirements for smaller, unaffiliated tax agents serving individuals and small businesses”.
Finally, the target should be to provide “appropriate protection for shortcomings by an adviser, rather than imposing a uniform amount and design of [personal indemnity insurance] across the whole market”.
HMRC’s ‘Raising standards in the tax advice market’ consultation opened in March and the response window closed on Tuesday.
