HMRC’s tougher stance on tax advisers: where should the line be drawn?

New powers aimed at tackling tax avoidance are raising wider concerns across the advisory profession.

HMRC’s new powers targeting tax advisers came into force on 1 April 2026 and have already prompted significant discussion across the tax and accountancy profession.

At face value, the intention behind the legislation is understandable. HMRC is seeking to strengthen its ability to tackle advisers who deliberately promote or facilitate aggressive tax avoidance arrangements that deprive the Exchequer of revenue. Few reputable advisers would disagree with that principle.

However, concern is growing around how widely the legislation has been drafted, and whether mainstream advisers providing legitimate tax advice could unintentionally be caught within its scope.

The new rules give HMRC enhanced powers where it believes a tax adviser may have engaged in what the legislation defines as “sanctionable conduct”.

In practice, this gives HMRC greater scope to request access to adviser files and supporting documentation, investigate advice given to clients, impose financial penalties where inaccuracies are identified and publicly name advisers in certain circumstances.

The legislation is primarily aimed at tackling advisers involved in deliberate tax avoidance schemes. The challenge is that the wording extends much more broadly across the advisory profession.

Tax legislation is rarely straightforward. Many areas of tax involve interpretation, judgement and technical uncertainty. Advisers frequently operate in areas where legislation is unclear, case law continues to evolve or HMRC guidance does not fully align with wider legal interpretation.

That is where many firms are becoming uneasy.

The concern is not necessarily that HMRC will aggressively target reputable firms acting in good faith. Rather, it is that the existence of these powers may increase professional risk, regulatory pressure and defensive working practices across the industry.

The tax profession is already operating within an environment of increasing scrutiny and compliance obligations. Many firms are now reviewing how they document advice, evidence technical conclusions and manage areas of uncertainty.

In practical terms, the likely impact will be operational rather than dramatic.

Firms are likely to introduce more detailed file notes, enhanced internal review procedures, greater use of specialist counsel on complex matters and more formalised technical documentation around areas of uncertainty.

While these steps may help firms protect themselves, they also increase the administrative burden associated with providing tax advice. Inevitably, that affects cost, time and efficiency.

For many firms, the concern is not necessarily the penalties themselves, but the wider disruption and professional risk that investigations or file reviews could create, even where advisers believe they have acted appropriately and responsibly.

One unintended consequence may be that some smaller firms become more cautious about offering complex tax advisory services altogether.

As compliance expectations continue to rise, some may decide the commercial risk and regulatory burden no longer justify certain areas of advisory work.

That could leave businesses and individuals with fewer options when seeking experienced tax advice, particularly in specialist or more nuanced areas of taxation.

It may also increase the cost of obtaining professional advice as firms devote more time to governance, documentation and risk management.

Most advisers support HMRC taking action against genuinely abusive tax avoidance arrangements.

The wider concern is one of proportionality. Legislation designed to target a relatively small number of bad actors can sometimes create broader uncertainty for firms acting responsibly and professionally.

The vast majority of advisers are trying to help clients navigate an increasingly complex tax system, comply with legislation and make informed decisions based on the facts available at the time.

As tax law continues to evolve, maintaining a balance between robust enforcement and reasonable professional judgement will remain an important challenge for both HMRC and the profession alike.

If you would like to discuss how these changes may affect your business or the way you approach tax advice, Stephen Martin and Chris Watts at Old Mill would be happy to help you assess your position and ensure your arrangements remain robust, compliant and well documented.