HMRC Guidance Under Fire

Summary

Leading tax and business experts have voiced growing concerns over the effectiveness of HMRC’s guidance in addressing tax avoidance, warning that current policies are unclear and risk damaging the integrity of the accountancy sector. Contractors and advisers across the UK are urged to pay close attention as Parliament considers tightening rules and introducing criminal penalties for promoters of tax avoidance schemes.

HMRC’s Guidance Under Scrutiny

The House of Lords Finance Bill Sub-Committee recently summoned leaders from across the tax profession to examine government plans to strengthen regulations on tax avoidance. Central to the debate was the proposal to make non-disclosure of tax avoidance schemes a criminal offence under the Disclosure of Tax Avoidance Schemes (DOTAS) regime.

Alice Jeffries, Head of Tax Policy at the Confederation of British Industry (CBI), was unequivocal: HMRC’s guidance is failing advisers.

“HMRC guidance is quite often either too woolly, too specific, too generic, or anything in between. It’s quite helpful if it’s updated in line with case law, which is something that often does not happen.”

This lack of clarity, she argued, makes it difficult for advisers to provide sound guidance to clients and hinders compliance efforts.

The Need for Upstream Compliance

Jeffries urged HMRC to focus on preventing tax avoidance at its source, recommending closer collaboration with the Advertising Standards Authority (ASA) to curb the marketing of dubious schemes.

Key recommendations included:

• Regular and timely updates to HMRC guidance reflecting recent case law

• Greater scrutiny and regulation of tax avoidance scheme advertising

• Working with the ASA to enforce standards of legality, decency, honesty, and truthfulness in tax scheme promotion

“Applying advertising standards to promoters and platforms would go a long way to stopping mis-selling,” Jeffries asserted.

Professional Standards and Market Integrity

Mike Lewis, Director of TaxWatch, highlighted the persistent prevalence of avoidance schemes, pointing to a disconnect between professional bodies and the standards they uphold.

“The conveyor belt that those professional standards were supposed to put in place between schemers and not being able to stay within the respected professions, that conveyor belt isn’t working.”

Lewis’s comments point to a wider issue: the need for professional bodies to enforce discipline when members are implicated in promoting or facilitating aggressive tax avoidance.

Risks of Criminalising Non-Disclosure

Parliament’s consideration of criminal penalties for non-disclosure in the DOTAS regime prompted strong warnings from the profession. Chris Sanger, Tax Policy Leader at EY, explained that DOTAS was originally designed as a broad funnel to allow HMRC to review a wide range of schemes and focus enforcement where necessary.

Sanger warned:

“If we criminalise non-disclosure, you end up flipping the switch the other way around where everyone wants in. If we go down a criminalisation route, we will lose all that benefit.”

He described the risk of stifling transparency, as advisers may default to over-disclosure or, more concerningly, leave the accountancy profession altogether to avoid criminal liability.

Impact on the Accountancy Sector

The committee explored whether the proposed reforms might have unintended consequences for the wider accountancy and advisory sector. Sanger cautioned that the threat of criminal liability could drive skilled professionals out of accountancy firms and into law firms, where legal professional privilege provides an extra layer of defence.

“If you’ve got that criminal offence hanging over you, you’d want to work out whether you want to be advising in that market. As an advisor, you’ll sleep better at night knowing you were at a law firm rather than an accounting firm, so it distorts the market.”

Such a shift would undermine the stability and continuity of the British accountancy profession, eroding a tradition built on trust, expertise, and public service.

Quotes & Sources

• Alice Jeffries, Head of Tax Policy, CBI: “HMRC should look to update their guidance, as advisers rely on it to inform client decisions.”

• Mike Lewis, Director, TaxWatch: “The menagerie of schemes is wider than HMRC’s focus; professional standards are not being enforced as intended.”

• Chris Sanger, Tax Policy Leader, EY: “The DOTAS regime has succeeded as a broad funnel. Criminalising non-disclosure risks losing this benefit and distorting the sector.”

Source: House of Lords Finance Bill Sub-Committee hearing, October 2025

Next Steps for UK Contractors

To safeguard the stability of the profession and ensure compliance:

• Stay informed: Regularly review updates from HMRC and professional bodies

• Seek robust, up-to-date advice on tax planning and compliance

• Report suspicious tax avoidance schemes to HMRC and the ASA

• Encourage your professional networks to uphold the highest ethical standards

In Closing

The British accountancy profession is a pillar of our nation’s economic stability. As government and HMRC consider new measures against tax avoidance, clarity in guidance, robust standards, and a balanced regulatory approach will be crucial. UK contractors and advisers, standing together in upholding tradition and trust, are best placed to ensure a fair and stable tax system for all.