Legal professionals face ‘undue burden’ as HMRC’s tax adviser legislation looms

Law Society warns that HMRC’s broad definitions in new tax adviser legislation may burden legal professionals

Legal professionals are sounding the alarm over HM Revenue & Customs’ (HMRC) upcoming tax adviser legislation, set to take effect on 1 April 2026. The Law Society has raised concerns that the proposed rules could impose an “undue burden” on legal practitioners, particularly sole practitioners and small firms, without delivering tangible benefits to taxpayers.

The draft legislation, titled ‘Modernising and Mandating Tax Adviser Registration with HMRC,’ introduces a legal requirement for tax advisers who interact with HMRC on behalf of clients to register and meet minimum standards. While HMRC aims to raise standards in the tax advice market and protect taxpayers, the Law Society argues that the broad definitions of ‘tax adviser’ and ‘interaction with HMRC’ could inadvertently capture legal professionals who do not consider themselves tax specialists.

Richard Atkinson, President of the Law Society, expressed concern that the legislation’s scope is too wide, potentially affecting professionals who neither advertise themselves as tax specialists nor act as tax advisers in any meaningful sense. He highlighted that even conveyancers completing Stamp Duty Land Tax returns could be impacted, complicating and lengthening the conveyancing process.

The Law Society recommends that the regime be limited to those who routinely act as agents in relation to a client’s tax affairs or who hold themselves out as tax advisers. Additionally, they advocate for greater clarity on firm-level versus individual registration requirements and the exclusion of professionals already subject to other regulatory regimes to avoid duplication.

Former Clifford Chance partner Dan Neidle, now of Tax Policy Associates, echoed these concerns, stating that the legislation could burden small advisers without addressing the actions of those facilitating non-compliance. He pointed out that individuals selling misleading tax avoidance schemes often do not submit tax returns themselves and would not be required to register under the new rules.

HMRC has acknowledged the feedback and is reviewing the consultation responses. A spokesperson emphasized the agency’s commitment to working closely with the tax adviser community to strengthen compliance and maintain public confidence in the tax system.

As the implementation date approaches, legal professionals and industry bodies continue to scrutinize the proposed legislation, seeking adjustments to ensure that regulatory measures effectively target non-compliant advisers without imposing unnecessary burdens on the broader legal community.