Term 'professional advisor' causing problems for some

Date: 2nd September 2008

Accountants and HM Revenue & Customs (HMRC) are engaged in a row about who qualifies as a 'professional adviser'.

The Telegraph reported that accountants from UHY Hacker Young have complained that some business owners could find themselves charged penalties for mistakes on their tax returns, despite reassurances from HMRC that they would be safe as long as they took "reasonable care" when completing the forms.

Simon Newark, the firm's VAT partner, told the paper that HMRC defines reasonable care as taking advice from a tax professional and warned that this could exclude the majority of high street accountants.

The paper explained that when it asked HMRC about the issue, a spokesperson said: "We cannot and do not specify that an adviser should have certain qualifications. That is for the taxpayer to consider when choosing who to seek advice from.

"Each person has a responsibility to take reasonable care. But what is necessary for each person to meet that responsibility has to be viewed in the light of their abilities and circumstances."

However, Mr Newark countered: "The 'reasonable care' clause was clearly not given proper consideration and is causing much confusion rather than making things easier."

Recently, HMRC launched a new podcast for accountants that explained penalties in the UK's tat regime.