Cornwall tax advisers must register with HMRC from May under new mandatory rules

Conveyancing solicitors, payroll teams and other professionals across Cornwall could be breaking the law from next month if they have not registered with HMRC under sweeping new rules for tax advisers.

From May, anyone who interacts with or submits documents to HMRC on behalf of clients will be legally required to register, under a mandatory scheme that replaces the existing voluntary registration system. Penalties for non-compliance range from £5,000 to £10,000.

Who is affected?

The definition of “tax adviser” under the new rules is broad, and that is where many professionals could be caught off guard.

Rick Schofield, a tax partner at Azets, the UK top 10 accountancy and business advisory firm with offices in Truro, said: “There are going to be some costly errors made by unsuspecting organisations or individual sole traders who assist other people with their tax affairs.”

“This compliance shake-up is going to catch a lot of people out, the good as well as the bad, such as when it comes to stamp duty returns or chasing a PAYE code.”

Payroll teams are not exempt. Rick said: “You must register even if it is an email or portal enquiry to chase a PAYE code for a member of staff.”

Confusion over partnerships

One area causing particular uncertainty is how the rules will apply to professional partnerships. It is not yet clear whether it is the firm or the individual partner who would be liable for a breach.

Rick suggested that, to be on the safe side, each partner within a firm may wish to register individually, even if they do not typically submit paperwork to HMRC themselves.

The accountancy profession has raised concerns with Parliament that the registration requirements place an unfair burden on smaller firms compared to larger ones.

Rick said: “Everyone is looking to HMRC for an exhaustive do’s and don’ts list but nothing is forthcoming yet, adding to a sense of filing doom from May. People just want clarity and guidance.”

What HMRC says

According to HMRC, the changes are designed to ensure all tax advisers interacting with HMRC on behalf of clients meet minimum standards, and will improve its ability to monitor and exclude advisers who are unable to meet its Standards for Agents or cannot lawfully act as a tax adviser.

A digital registration process will be available, with a non-digital alternative for those who are digitally excluded. HMRC says it is investing £36 million to modernise existing registration services.

The process begins in May, with a transitional period of at least three months. There are no registration fees.

What about individual taxpayers?

In a policy paper published last November, HMRC stated that individual taxpayers would not be directly affected by the requirement for their advisers to register. However, Rick warned that could change if an adviser is unable or unwilling to comply.

“You may see individual taxpayers left in expensive limbo, and facing late penalty fines, if their agents decline to send documentation to HMRC for whatever reason.”

More change piling up for businesses

The mandatory registration comes on top of a busy period of compliance changes. From the 6th of April, the government’s Making Tax Digital for Income Tax scheme was rolled out, requiring landlords and sole traders earning more than £50,000 to use authorised software to submit quarterly updates to HMRC.

The overhaul affects 864,000 individuals and landlords nationwide, with that figure expected to rise to 2.9 million within three years. From April 2027, those earning over £30,000 will come into scope, followed by those earning over £20,000 from April 2028.

An Azets poll found that the vast majority of businesses were unprepared for what is being described as the most significant change to the UK tax system since the introduction of self-assessment nearly 30 years ago.

Businesses also faced new obligations from the 6th of April around holiday pay compliance, with the new Fair Work Agency able to impose fines or open criminal investigations where paperwork is incorrect and staff are underpaid.