Legislation – Finance Act 2026

“Tax adviser

2

(1)

In this Schedule “tax adviser” means—

(a)

an organisation that, in the course of a business carried on by it, assists other persons with their tax affairs, or

(b)

an individual who, in the course of a business (whether carried on by the individual as a sole trader or by an organisation for which the individual works), assists other persons with their tax affairs.

(2)

An organisation or individual assists another person with their tax affairs if the organisation or individual does any of the following—

(a)

advises the other person in relation to tax;

(b)

acts or purports to act as an agent on behalf of the other person in relation to tax;

(c)

provides assistance with any document that is likely to be relied on by HMRC to determine the other person’s tax position;

(d)

provides assistance for non-tax purposes, if the assistance is provided in the knowledge that it will be, or is likely to be, used by the other person in connection with the other person’s tax affairs.

(3)

A person can be a tax adviser even if they, or an organisation for which they work, are appointed indirectly (for example, at the request of someone other than their client).

(4)

In this Schedule (except in paragraph 17) “client”, in relation to a tax adviser, means a person who the adviser, in the course of a business (whether carried on by the adviser or by an organisation for which the adviser works), assists with their tax affairs.”

5 (1)

In the italic heading before paragraph 3, for “Dishonest” substitute “Sanctionable”.

(2)

In paragraph 3 (dishonest conduct)—

(a)

for sub-paragraph (1) substitute—

“(1)

For the purposes of this Schedule, a person “engages in sanctionable conduct” if, in the course of acting as a tax adviser, the person does something with the intention of bringing about a loss of tax revenue.”;

(b)

in sub-paragraph (3), for “individual” substitute “person”;

(c)

for sub-paragraph (7) substitute—

“(7)

A reference in this paragraph to doing something includes omitting to do something.”

6

Omit Part 2 (establishing dishonest conduct).

7

In the Part 3 heading, for “agent’s” substitute “adviser’s”.

8

In paragraph 7 (circumstances in which power is exercisable)—

(a)

in sub-paragraph (1), after “and” insert “, in respect of a person other than a tax adviser,”;

(b)

after sub-paragraph (1) insert—

“(1A)

An officer of Revenue and Customs may ask for the approval of the tribunal before exercising the power in paragraph 8 in respect of a tax adviser (and for the effect of not obtaining such approval see paragraph 20(1A) (appeals)).”;

(c)

for sub-paragraph (2) substitute—

“(2)

Case A is where an authorised officer of Revenue and Customs has reasonable grounds to suspect that a person is engaging in, or has engaged in, sanctionable conduct.”;

(d)

in sub-paragraph (3)—

(i)

in paragraph (a), for “an individual” substitute “a person”;

(ii)

in paragraph (b)—

(A)

for “individual” (in each place it occurs) substitute “person”;

(B)

for “agent” (in each place it occurs) substitute “adviser”;

(e)

in sub-paragraph (4), in the opening words—

(i)

omit “determination or”;

(ii)

omit “confirmed or”;

(f)

in sub-paragraph (5)—

(i)

in the opening words, for “agent” substitute “adviser”;

(ii)

in paragraphs (a) and (b), for “individual” substitute “person”;

(g)

in sub-paragraph (6)—

(i)

for “individual” substitute “person”;

(ii)

for “agent” substitute “adviser”.

9

In paragraph 8(2)(a) (file access notice), for “agent” substitute “adviser”.

10

In paragraph 9 (relevant documents)—

(a)

in sub-paragraph (1)—

(i)

for “agent’s” substitute “adviser’s”;

(ii)

for “agent” (in each place it occurs) substitute “adviser”;

(b)

in sub-paragraph (3), omit paragraph (b) and the “and” before it.

11

In paragraph 10 (content of file access notice)—

(a)

in sub-paragraph (1), after “may” insert “, subject to sub-paragraph (1A),”;

(b)

after sub-paragraph (1) insert—

“(1A)

In a case falling within case A (see paragraph 7), a file access notice may only require the provision of relevant documents relating to clients of the tax adviser with respect to whom the authorised officer of Revenue and Customs mentioned in paragraph 7(2) has reasonable grounds to suspect the tax adviser is engaging in or has engaged in sanctionable conduct.

(1B)

In a case falling within Case A (see paragraph 7), a file access notice—

(a)

must identify the clients of the tax adviser (in relation to whom relevant documents are required to be provided), and

(b)

may identify those clients by reference to a class or description of clients.”;

(c)

in sub-paragraph (2)—

(i)

for “A file” substitute “In a case falling within Case B (see paragraph 7), a file”;

(ii)

for “agent” substitute “adviser”;

(d)

in sub-paragraph (3), for “agent” (in each place it occurs) substitute “adviser”.

12

In paragraph 13 (approval of file access notice by tribunal)—

(a)

in sub-paragraph (1)(d), for “agent” substitute “adviser”;

(b)

in sub-paragraph (2)—

(i)

for “an individual” substitute “a person”;

(ii)

for “dishonest” substitute “sanctionable”.

13

In paragraph 20 (appeal against file access notice)—

(a)

in sub-paragraph (1), for “agent” substitute “adviser”;

(b)

after sub-paragraph (1) insert—

“(1A)

If—

(a)

the document-holder is the tax adviser, and

(b)

the giving of the file access notice was not approved by the tribunal (see paragraph 7(1A)),

the document-holder may appeal against the file access notice or any requirement in it.”;

(c)

in sub-paragraph (2), in the opening words, after “appeal” insert “under sub-paragraph (1) or (1A)”.

14

After paragraph 23 insert—

“Increased daily default penalty

23A

(1)

This paragraph applies if—

(a)

a penalty under paragraph 23 is assessed in respect of a person’s failure to comply with a file access notice,

(b)

the failure continues for more than 30 days beginning with the date on which notification of that assessment was issued, and

(c)

HMRC has (at any time) told the person that an application may be made under this paragraph for an increased daily penalty to be assessable.

(2)

An officer of Revenue and Customs may make an application to the tribunal for the person to be liable to an increased daily penalty.

(3)

If the tribunal decides that the person should be liable to an increased daily penalty—

(a)

the tribunal must determine the day from which the increased daily penalty is to apply and the maximum amount of that penalty (“the new maximum amount”), and

(b)

from that day, paragraph 23 has effect in the person’s case as if the new maximum amount were substituted for the amount for the time being specified there.

(4)

The new maximum amount may not be more than £1,000.

(5)

In determining the new maximum amount the tribunal must have regard to—

(a)

the likely cost to the person of complying with the notice,

(b)

any benefits to the person of not complying with it, and

(c)

any benefits to anyone else resulting from the person’s non-compliance.

(6)

If the tribunal makes a determination under this paragraph, HMRC must notify the person.

(7)

The notification must specify the new maximum amount and the day from which it applies.”

15

After paragraph 25 insert—

“Penalties for inaccurate documents

25A

(1)

If a person, in purported compliance with a file access notice, provides a document that contains an inaccuracy, the person is liable to a penalty not exceeding £3,000 where—

(a)

the inaccuracy is deliberate or due to a failure by the person to take reasonable care,

(b)

the person knows of the inaccuracy at the time the document is provided but does not inform HMRC at that time, or

(c)

the person discovers the inaccuracy some time later and fails to take reasonable steps to inform HMRC.

(2)

Where the document contains more than one inaccuracy, a penalty is payable for each inaccuracy.”

16

After Part 3 insert—

“Part 3AConduct notices

Giving of conduct notice

25B

(1)

This paragraph applies if HMRC determine that a person is engaging in or has engaged in sanctionable conduct.

(2)

An authorised officer (or an officer of Revenue and Customs with the approval of an authorised officer) may notify the person of the determination.

(3)

The notice must state the grounds on which the determination was made.

(4)

For the effect of notifying the person, see paragraph 29(2).

(5)

A notice under this paragraph is referred to as a “conduct notice”.

Withdrawal of conduct notice

25C

(1)

An officer of Revenue and Customs may withdraw a conduct notice at any time.

(2)

If they do so, they must notify the person of the withdrawal.

(3)

A conduct notice given to a person is to be treated as withdrawn at the applicable deadline if HMRC have not, before such deadline, assessed the person to a penalty under Part 4 in respect of the conduct forming the subject of the notice.

(4)

In this paragraph “the applicable deadline” has the same meaning as in paragraph 30(3) (assessment of penalties).”

17

In the Part 4 heading, for “dishonest” substitute “sanctionable”.

18

For paragraph 26 and the italic heading before it (penalty for dishonest conduct) substitute—

“Penalty for sanctionable conduct

26

(1)

A person who engages in sanctionable conduct is liable to a penalty.

(2)

The penalty to which the person is liable is—

(a)

in a case in which potential lost revenue is attributable to the sanctionable conduct (see paragraph 26C)—

(i)

the appropriate percentage of the potential lost revenue determined in accordance with paragraph 26C, or

(ii)

if higher, £7,500;

(b)

in any other case, £7,500.

(3)

But if the person would, but for this sub-paragraph, be liable to a penalty of an amount that is higher than £1,000,000, the person is instead liable to a penalty of that amount.

(4)

For the purposes of this paragraph, the “appropriate percentage” is—

(a)

70%, or

(b)

if the person disclosed the sanctionable conduct, the percentage determined in accordance with sub-paragraphs (5) and (6).

(5)

If the person disclosed the sanctionable conduct, HMRC must reduce the appropriate percentage from 70% to a percentage that reflects the quality of the disclosure.

(6)

But the appropriate percentage may not be reduced to a percentage that is below—

(a)

in the case of a prompted disclosure, 35%, and

(b)

in the case of an unprompted disclosure, 20%.

(7)

This paragraph is subject to paragraphs 26B (increased penalties) and 27 (special reduction).

Disclosure of conduct

26A

(1)

For the purposes of paragraph 26, a person “discloses” sanctionable conduct by—

(a)

telling HMRC about it,

(b)

giving HMRC reasonable help in identifying the client or clients concerned and in quantifying the loss of tax revenue (if any) brought about by it, and

(c)

allowing HMRC access to records for the purpose of ensuring that any such loss is recovered or otherwise properly accounted for.

(2)

A disclosure is “unprompted” if it is made at a time when the person has no reason to believe that HMRC have discovered or are about to discover the sanctionable conduct.

(3)

Otherwise, a disclosure is “prompted”.

(4)

In relation to disclosure, “quality” includes timing, nature and extent.

Increased penalties

26B

(1)

Sub-paragraph (2) applies where—

(a)

a person is liable to a penalty under paragraph 26, and

(b)

in the period of 20 years ending with the day on which the person became liable to the penalty, the person has been assessed to a penalty under that paragraph on more than 1, but fewer than 6, occasions.

(2)

Paragraph 26 applies in relation to the penalty mentioned in sub-paragraph (1)(a) as if—

(a)

each reference to 70% of the potential lost revenue were a reference to 85% of the potential lost revenue, and

(b)

the reference in sub-paragraph (3) to £1,000,000 were a reference to £5,000,000.

(3)

Sub-paragraph (4) applies where—

(a)

a person is liable to a penalty under paragraph 26, and

(b)

in the period of 20 years ending with the day on which the person became liable to the penalty, the person has been assessed to a penalty under that paragraph on 6 or more occasions.

(4)

Paragraph 26 applies in relation to the penalty mentioned in sub-paragraph (3)(a) as if—

(a)

each reference to 70% of the potential lost revenue were a reference to 100% of the potential lost revenue, and

(b)

sub-paragraph (3) (maximum amount) were omitted.

(5)

For the purposes of sub-paragraphs (1)(b) and (3)(b), a penalty under paragraph 26 is not to be taken into account if—

(a)

the person was assessed to the penalty more than 4 years before the day mentioned in sub-paragraph (1)(b) or (3)(b) (as the case may be), and

(b)

in the period of 4 years after the penalty was assessed, the person was not assessed to another such penalty.

(6)

Where—

(a)

a penalty under paragraph 26 is not to be taken into account in accordance with sub-paragraph (5), and

(b)

the person had previously been assessed to one or more other penalties under paragraph 26,

those previous penalties are also not to be taken into account for the purposes of sub-paragraphs (1)(b) and (3)(b).

(7)

For the purposes of sub-paragraphs (1)(b) and (3)(b), if a person is assessed to a penalty under paragraph 26 and the penalty is, at any time, subsequently set aside or otherwise cancelled, the penalty is to be treated from that time as if it was not assessed on the person.

Potential lost revenue

26C

(1)

Potential lost revenue is attributable to a tax adviser’s sanctionable conduct if—

(a)

an act within sub-paragraph (2) takes place, and

(b)

the sanctionable conduct includes the tax adviser—

(i)

doing the act on behalf of the client, or

(ii)

advising or assisting the client to do the act.

(2)

The following acts are within this sub-paragraph—

(a)

the giving to HMRC of a document of a kind listed in the table in paragraph 1 of Schedule 24 to FA 2007 (error in taxpayer’s document) by a client where the condition in paragraph 1(2) of that Schedule is satisfied;

(b)

a failure by a client to comply with an obligation specified in the table in paragraph 1 of Schedule 41 to FA 2008 (failure to notify etc);

(c)

a failure by a client to make or deliver a return specified in the table in paragraph 1 of Schedule 55 to FA 2009 (failure to make returns etc) on or before the filing date where the failure continues after the end of the period of 12 months beginning with the penalty date;

(d)

a failure by a client to make a return specified in the third column of the table in paragraph 1 of Schedule 25 to FA 2021 (failure to make returns etc) on or before the due date.

(3)

In sub-paragraph (2)(c) “filing date” and “penalty date” have the same meaning as in Schedule 55 to FA 2009 (see paragraph 1(4) of that Schedule).

(4)

In sub-paragraph (2)(d) “due date” has the same meaning as in Schedule 25 to FA 2021 (see paragraph 2(4) of that Schedule).

(5)

The amount of potential lost revenue that is attributable to the sanctionable conduct is—

(a)

in a case within sub-paragraph (2)(a), the potential lost revenue in respect of the inaccuracy in question as determined in accordance with paragraphs 5 to 8 of Schedule 24 to FA 2007;

(b)

in a case within sub-paragraph (2)(b), the potential lost revenue in respect of the failure as determined in accordance with paragraphs 7 and 11 of Schedule 41 to FA 2008;

(c)

in a case within sub-paragraph (2)(c), the amount of the liability to tax which would have been shown in the return in question as determined in accordance with paragraph 24 of Schedule 55 to FA 2009;

(d)

in a case within sub-paragraph (2)(d), the amount of the liability to tax which would have been shown in the return in question as determined in accordance with paragraph 11 of Schedule 25 to FA 2021.

(6)

In its application for the purposes of sub-paragraph (5)(c), paragraph 24(2) of Schedule 55 to FA 2009 (determination of penalty where no return made) has effect as if references to a penalty were references to a penalty under this Schedule.

(7)

In its application for the purposes of sub-paragraph (5)(d), paragraph 11(2) and (3) of Schedule 25 to FA 2021 (determination of penalty where no return made) has effect as if references to a penalty were references to a penalty under this Schedule.”

19

In paragraph 27 (special reduction)—

(a)

in sub-paragraph (1)—

(i)

for “an individual” substitute “a person”;

(ii)

omit “of £5,000”;

(b)

in sub-paragraph (2)(a), omit “to an amount below £5,000 (which may be nil)”.

20

In paragraph 28 (power to publish details)—

(a)

for sub-paragraph (1), substitute—

“(1)

The Commissioners must publish information about a person if the person incurs a penalty under paragraph 26 of more than £7,500.”;

(b)

in sub-paragraph (2)—

(i)

in paragraph (a), for “individual’s” substitute “person’s”;

(ii)

in paragraph (b), for “individual’s address” substitute “person’s postcode”;

(iii)

in paragraph (c), for “individual” substitute “person”;

(iv)

in paragraph (e), for “dishonest” substitute “sanctionable”;

(v)

in paragraph (f), for “individual’s” substitute “person’s”;

(vi)

in paragraph (g), for “dishonest” substitute “sanctionable”;

(c)

omit sub-paragraph (3);

(d)

in sub-paragraph (4)—

(i)

after “(5)” insert “, (7)”;

(ii)

for “an individual” substitute “a person”;

(e)

in sub-paragraph (5)—

(i)

for “agent” substitute “adviser”;

(ii)

for “the individual” substitute “an individual”.

21

In paragraph 29 (assessment of penalties)—

(a)

in sub-paragraph (2), for the words from “and either” to the end substitute “and not withdrawn”;

(b)

omit sub-paragraph (3).

22

In paragraph 30 (deadline for assessment)—

(a)

in sub-paragraph (3)(a), omit “(see paragraph 29(2))”;

(b)

in sub-paragraphs (4) and (5), for “dishonest” substitute “sanctionable”.

23

In paragraph 31 (appeal against penalty)—

(a)

in sub-paragraph (1)(a), after “Part 3” insert “or 4”;

(b)

after sub-paragraph (1) insert—

“(1A)

But sub-paragraph (1)(b) does not give a right of appeal against the amount of an increased daily penalty payable as a result of paragraph 23A (increased daily default penalty).”

24

In paragraph 35 (power to change amount of penalties)—

(a)

for sub-paragraph (1) substitute—

“(1)

The Treasury may by regulations amend any of paragraphs 22(1), 23, 23A(4), 25A(1), 26(2) and (3), 26B(2) and 28(1) so as to increase or decrease the amount of a penalty for the time being specified in those paragraphs to reflect a change in the value of money.”;

(b)

omit sub-paragraph (2).

25

In paragraph 37(1) (meaning of “tax”), after paragraph (la) insert—

“(lb)

diverted profits tax,

(lc)

multinational top-up tax,

(ld)

domestic top-up tax,

(le)

annual tax on enveloped dwellings,

(lf)

plastic packaging tax,

(lg)

economic crime (anti-money laundering) levy,

(lh)

digital services tax,

(li)

soft drinks industry levy,”.

26

In paragraph 38—

(a)

in the definition of “client”—

(i)

in paragraph (a), for “paragraph 2(1)” substitute “paragraph 2(4)”;

(ii)

omit paragraph (b);

(b)

in the definition of “conduct notice”, for “paragraph 4” substitute “paragraph 25B”;

(c)

in the definition of “organisation”, for “includes any person or firm” substitute “means any body corporate, partnership or other organisation”.

27

Omit paragraph 39 (clients).

28

In paragraph 40 (loss of tax revenue), for “dishonest” substitute “sanctionable”.

Part 2Consequential amendments

TMA 1970

29

In section 103ZA of TMA 1970 (disapplication of sections 100 to 103 in the case of certain penalties), in paragraph (g), for “tax agents: dishonest conduct” substitute “tax advisers: sanctionable conduct”.

30

In section 110ZA(2A) of the Social Security Administration Act 1992 (class 1, 1A, 1B or 2 contributions: powers to call for documents etc), for “tax agent’s” substitute “tax adviser’s”.

31

In section 104ZA(2A) of the Social Security Administration (Northern Ireland) Act 1992 (class 1, 1A, 1B or 2 contributions: powers to call for documents etc), for “tax agent’s” substitute “tax adviser’s”.

The Education (Student Loans) (Repayment) Regulations (Northern Ireland) 2009

32

In regulation 9(2) of the Education (Student Loans) (Repayment) Regulations (Northern Ireland) 2009 (S.I. 2009/128) (student loan repayments: penalties), for “Tax Agents: Dishonest Conduct” substitute “tax advisers: sanctionable conduct”.

The Education (Student Loans) (Repayment) Regulations 2009

33

In regulation 13(2) of the Education (Student Loans) (Repayment) Regulations 2009 (S.I. 2009/470) (student loan repayments: penalties), for “Tax Agents: Dishonest Conduct” substitute “tax advisers: sanctionable conduct”.

FA 2012

34

In section 223 of FA 2012 (tax agents: dishonest conduct)—

(a)

for the heading substitute “Tax advisers: sanctionable conduct”;

(b)

in subsection (1)—

(i)

for “agents” substitute “advisers”;

(ii)

for “dishonest” substitute “sanctionable”.

35

In the Social Security (Contributions) (Amendment and Application of Schedule 38 to the Finance Act 2012) Regulations 2013 (S.I. 2013/622)—

(a)

for the Part 5 heading substitute “Tax advisers: sanctionable conduct”;

(b)

in regulation 41 (application of Schedule 38 to the Finance Act 2012), for “tax agents: dishonest conduct” substitute “tax advisers: sanctionable conduct”.

The Small Charitable Donations Regulations 2013

36

In regulation 6 of the Small Charitable Donations Regulations 2013 (S.I. 2013/938) (agents of the charity: information powers and penalties)—

(a)

in paragraph (1)—

(i)

for “tax agents: dishonest conduct” substitute “tax advisers: sanctionable conduct”;

(ii)

for “to tax agents” substitute “to tax advisers”;

(b)

in paragraph (2)(a), for “agent” substitute “adviser”.

FA 2014

37

In Schedule 34 to FA 2014 (promoters of tax avoidance schemes: threshold conditions), for paragraph 4 and the italic heading before it (dishonest tax agents) substitute—

“Tax advisers

4

A person meets this condition if the person is given a notification of a penalty under paragraph 26 of Schedule 38 to FA 2012 (tax advisers: sanctionable conduct) and either—

(a)

the time period during which a notice of appeal may be given in relation to the penalty has expired, or

(b)

an appeal against the penalty has been made and the tribunal has confirmed the decision that a penalty is payable under that paragraph (whether or not the amount of the penalty is varied).”