The Association of Consulting Actuaries (ACA) has warned that the HM Revenue & Customs (HMRC) initiative to improve standards in tax advice could “inadvertently” impact the pensions market.
In its response to HMRC's consultation on raising standards in the tax advice market, which closed yesterday, the ACA made it clear the initiative should not come at the expense of accidentally damaging the pension advice market or the provision of high-quality information to scheme members.
ACA chair Patrick Bloomfield said: "HMRC is looking to find an extremely wide definition of ‘tax advice'.
"This is understandable as it means promoters of tax avoidance schemes cannot hide behind a label of offering ‘guidance' rather than ‘tax advice' but, given the complexity of pensions tax rules, such a definition could inadvertently capture a wide element of the industry helping the day-to-day delivery of pension schemes."
He added: "This could significantly inconvenience scheme members and bring pensions professionals into regulations primarily designed with traditional tax advisers and their clients in mind."
ACA pensions tax committee vice-chair Tim Sexton added: "The ACA is also concerned it could become difficult to communicate with trustees, employers or members effectively without encroaching on a wide view of tax advice.
"Any policy regulating tax advice should not interrupt the high quality advice given by pension professionals, interfere with the good running of pension schemes, or interfere with The Pension Regulator's aim that pension schemes give members as full as possible information to understand their rights and options."
In its latest consultation, HMRC has proposed making a minimum level of professional indemnity insurance (PII) mandatory for tax advisers.
The ACA has suggested that if HMRC intends to make PII cover mandatory across the very diverse range of advisers who comment on tax matters to clients then the policy should:
- Focus on protecting personal customers and small business customers rather than larger businesses which already tend to have strong procurement processes;
- Avoid duplicating equivalent requirements already imposed by professional bodies or statutory regulators, and construct simple coverage requirements for smaller unaffiliated tax agents serving individuals and small businesses;
- Target providing appropriate protection for shortcomings by an adviser rather than imposing a uniform amount and design of PII across the whole market.