Registration and Responsibility: Regulating the Conduct of Tax Advisors in the UK

Overview

It is a topic that has slipped under the radar in the flurry of activity and news bulletins about the new UK carry tax regime, but the Finance (No. 2) Bill 2026 also contains new registration requirements and conduct rules for tax advisers. Although the primary target of the rules was tax advisory firms, the legislation in its current form is drafted broadly enough to also capture many fund management and advisory businesses.

In-scope businesses (whether UK-based or otherwise) are required to register with HM Revenue & Customs (“HMRC”) as a “tax adviser” in order to interact with HMRC in any way, and there are financial and regulatory penalties for noncompliance.

Goodwin has been proactively engaged with HMRC, via industry bodies such as UK Private Capital (formerly the BVCA), to seek to clarify and limit the scope of some key concepts. It is welcome news, therefore, that HMRC have announced that implementation of these rules as they pertain to the financial services industry is to be deferred until 31 March 2027. We understand that, conceptually, “in-house” tax advisers were not the main target, and the delayed start date should allow for the rules to be amended to better cater for the financial services industry. Nonetheless, fund managers should monitor the outcome of these discussions to assess any likely impacts on their business.

1. Registration: What Is a Tax Adviser?

A “tax adviser” under this regime captures any organisation or individual that assists others with their tax affairs, acts as an agent on behalf of others in relation to tax, or provides assistance with any document likely to be relied on by HMRC to determine the other person’s tax position.

Given the wide scope of the definition, many fund managers’ in-house tax teams (including fund managers not in the UK) may fall within it. For example, assisting investors or executives with their UK tax positions, or helping with tax matters relevant to UK investments or qualifying asset holding companies, could bring a business within scope.

There is a helpful exemption where such assistance is provided only to corporate group undertakings, but this does not cover nongroup entities (such as minority fund investments). It is also unclear whether fund managers could, for example, assist an employee or former employee with tax-related documentation (such as carried interest tax reporting) within this intragroup exemption.

If unregistered, such tax advisers, regardless of jurisdiction, are prohibited from interacting or attempting to interact with HMRC in any way (including through phone calls, emails, HMRC’s website, or submitting filings) in relation to the tax affairs of a client. For this purpose, a “client” is anyone the tax adviser assists with their tax affairs in the course of its business.

2. Registration: Practical Challenges

Where an organisation meets the above definition of a tax adviser, it is regarded as carrying out any interaction with HMRC that is done by an individual who works for that organisation in the course of its business. This means that any such individuals should not need to register in their own right.

The registration formalities to be met are reasonably straightforward, but each organisation that is a tax adviser must separately register “relevant individuals” who play a significant role in how the tax advice function of the business is managed or organised. This is relevant because the tax adviser itself and each relevant individual must meet certain compliance obligations.

In particular, the organisation (and each of the organisation’s relevant individuals) must not have any relevant amount of tax outstanding or a relevant return outstanding (including for non-UK jurisdictions). This could be particularly problematic for fund managers or LLPs given the complexities of carried interest and partnership taxation, where filing on an estimated basis may be required. The risk of a foot-fault in this area seems material, and as such, HMRC’s approach to enforcement will be critical.

Parliamentary debate and feedback from HMRC so far indicate that HMRC are likely to allow time to remediate any such issues prior to taking action relating to the registration of the tax adviser itself.

3. Registration: Penalties

The rules will be enforced via an escalating penalty regime that begins with compliance notices and can culminate in permanent prohibition from being a tax adviser.

Once HMRC has issued a compliance notice for prohibited interaction with HMRC, any subsequent breach triggers financial penalties of £5,000 per contravention, rising to £10,000 in some cases.

4. Conduct Rules: Sanctionable Conduct

Alongside the registration requirements, an existing conduct regime is being revised so that it applies to all tax advisers (rather than just “tax agents”). Importantly, the definition of tax adviser for these conduct purposes is even broader than that used for the registration rules and includes those giving assistance for nontax purposes if it is given in the knowledge that the other person is likely to use it in connection with their tax affairs (for example, provision of financial information).

The new rules apply to conduct intended to bring about a “loss of tax revenue,” which includes accounting for less tax than “required by law.” A key point for which clarification is being sought, therefore, is that this concept of intention should not cover a situation where HMRC challenges a debatable but reasonable interpretation of a difficult area of law and ultimately prevails (whether at first instance or on appeal). This could be relevant, for example, to tax positions taken under the new UK carry tax rules.

Sanctions under this regime for conduct breaches begin at the higher of £7,500 or 70% of potential lost revenue (capped at £1,000,000), with penalties escalating to 85% (capped at £5,000,000) for repeat offenders and 100% (uncapped) for those with six or more prior assessments within 20 years.

5. What To Do Now

These provisions are in the Finance (No. 2) Bill currently passing through Parliament. In the run-up to the new April 2027 implementation date for financial services, we will be working with UK Private Capital to engage with HMRC and HM Treasury regarding the application of these rules to fund managers. Managers should monitor the outcome of these discussions to ascertain whether their business will be within scope.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.