Part 7 of Finance Bill 2026 introduces a number of new measures relevant to tax advisers, including enhanced HMRC powers around agent registration and conduct.
There has been particular concern expressed about the proposed changes regarding the conduct of tax advisers. These changes take effect from April 2026, and amend the current ‘dishonest conduct’ rules in FA 2012 Sch 38 to both widen their scope and introduce significantly higher penalties for those falling within them.
The amendments shift the focus of Sch 38 away from ‘dishonest conduct’ by advisers to the much wider and more vague term ‘sanctionable conduct’. This is defined in the Finance Bill legislation as a tax adviser doing something ‘with the intention of bringing about a loss of tax revenue’. This very wide definition has led to concerns that any action taken that results in a client paying less tax could fall foul of the rules, including something as simple as advising a client to claim a relief they are entitled to or make a pension contribution.
However, that’s not the full story. The definition of sanctionable conduct in the Finance Bill legislation needs to be viewed in the wider context of Sch 38. If we look at Sch 38 para 3 (which the Finance Bill inserts the new definition into) this defines ‘a loss of tax revenue’ as, effectively, not accounting for the correct tax at the correct time as required under the law.
This means the focus of the new rules is not merely on whether someone is paying less tax as a result of advice given, but whether or not they are doing so in line with the law. In short, provided the client is actually entitled to the relief/deduction you are advising them to claim, there should be no issue.
That’s not to say tax advisers can ignore the new rules completely though, as concerns remain regarding their scope. Tax is after all a complex area, and advice often by its very nature focuses on grey areas. Could these rules be invoked if an adviser comes to one conclusion on the interpretation of the law, but HMRC come to another? HMRC’s interpretation is of course not always correct, or else they would win every tribunal case they take. HMRC have said in previous engagement that genuine differences of statutory interpretation are not the focus of the rules, but that is not immediately obvious from the wording of the legislation.
What happens if an adviser makes an honest mistake which results in the client paying less tax due than under the law? Arguably this should not fall foul of the rules, as the adviser would not have acted with ‘the intention’ of bringing about a loss of tax contrary to the law. However, this is a matter of interpretation and the legislation contains no carve outs for ‘reasonable care’ or similar on the part of the adviser.
The ATT and other professional bodies have engaged extensively with HMRC on the new rules and will continue to do so. Although the legislation is much improved from initial drafts, there remains uncertainty as to its scope. HMRC have said they will clarify the scope of the rules in their accompanying guidance. Whilst this may give some comfort to the adviser community, it is of course no substitute for clearly defined legislation.
If you are providing tax advice you should keep an eye out for more information on the new rules so you can understand what they might mean for you and your firm. However, rest assured that, despite some speculation, they don’t mean you won’t be able to give any advice at all to your clients in future.
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Concerns over the scope of new conduct rules for advisers
What exactly is ‘sanctionable conduct’?
Part 7 of Finance Bill 2026 introduces a number of new measures relevant to tax advisers, including enhanced HMRC powers around agent registration and conduct.
There has been particular concern expressed about the proposed changes regarding the conduct of tax advisers. These changes take effect from April 2026, and amend the current ‘dishonest conduct’ rules in FA 2012 Sch 38 to both widen their scope and introduce significantly higher penalties for those falling within them.
The amendments shift the focus of Sch 38 away from ‘dishonest conduct’ by advisers to the much wider and more vague term ‘sanctionable conduct’. This is defined in the Finance Bill legislation as a tax adviser doing something ‘with the intention of bringing about a loss of tax revenue’. This very wide definition has led to concerns that any action taken that results in a client paying less tax could fall foul of the rules, including something as simple as advising a client to claim a relief they are entitled to or make a pension contribution.
However, that’s not the full story. The definition of sanctionable conduct in the Finance Bill legislation needs to be viewed in the wider context of Sch 38. If we look at Sch 38 para 3 (which the Finance Bill inserts the new definition into) this defines ‘a loss of tax revenue’ as, effectively, not accounting for the correct tax at the correct time as required under the law.
This means the focus of the new rules is not merely on whether someone is paying less tax as a result of advice given, but whether or not they are doing so in line with the law. In short, provided the client is actually entitled to the relief/deduction you are advising them to claim, there should be no issue.
That’s not to say tax advisers can ignore the new rules completely though, as concerns remain regarding their scope. Tax is after all a complex area, and advice often by its very nature focuses on grey areas. Could these rules be invoked if an adviser comes to one conclusion on the interpretation of the law, but HMRC come to another? HMRC’s interpretation is of course not always correct, or else they would win every tribunal case they take. HMRC have said in previous engagement that genuine differences of statutory interpretation are not the focus of the rules, but that is not immediately obvious from the wording of the legislation.
What happens if an adviser makes an honest mistake which results in the client paying less tax due than under the law? Arguably this should not fall foul of the rules, as the adviser would not have acted with ‘the intention’ of bringing about a loss of tax contrary to the law. However, this is a matter of interpretation and the legislation contains no carve outs for ‘reasonable care’ or similar on the part of the adviser.
The ATT and other professional bodies have engaged extensively with HMRC on the new rules and will continue to do so. Although the legislation is much improved from initial drafts, there remains uncertainty as to its scope. HMRC have said they will clarify the scope of the rules in their accompanying guidance. Whilst this may give some comfort to the adviser community, it is of course no substitute for clearly defined legislation.
If you are providing tax advice you should keep an eye out for more information on the new rules so you can understand what they might mean for you and your firm. However, rest assured that, despite some speculation, they don’t mean you won’t be able to give any advice at all to your clients in future.
