It is a regulatory or a professional body requirement that financial advisers, solicitors and accountants have professional indemnity insurance (PII) to protect both the adviser and the client against professional negligence causing financial loss or distress and inconvenience. This is not the case for tax advisers unless you offer tax advice as part of your remit as an adviser, solicitor or accountant.
The Tax Day consultation paper on Tax Advisers suggested the consultation will seek feedback on the definition of tax advice and a requirement to make PII compulsory for all tax advisers. The aim is to improve the standard of tax advice and provide consumers with compensation for loss is caused by bad advice.
We suggest that most reputable tax advisers should already have PII to protect both themselves and their clients. If they do not, do you really trust them to offer advice if they have no protection for negligence. Would you suffer the loss?
It should be a simple requirement of HMRC that if you offer tax advice and have a tax returns agency with HMRC to enable advisers to act on a clients behalf, they should be required to have PII.
Tongue in cheek: Does HMRC want tax advisers to have full insurance so that rather than going bankrupt or into liquidation, HMRC can still get tax payment penalties paid via professional indemnity insurance payouts?