Accountancy body warns Finance Bill could criminalise honest mistakes

The Institute of Chartered Accountants in England and Wales (ICAEW) has raised serious concerns about the upcoming Finance Bill. The professional body warns that key measures could threaten the survival of many firms and unfairly penalise compliant taxpayers.

Critics, including accountancy and business groups, argue the proposals are rushed, overly complex, and lack proper consultation. They are now pushing for a delay until at least 2027 to allow for further review and preparation.

One of the most controversial elements of the Bill is the mandatory registration for all tax advisers dealing with HMRC, set to begin in May. Under the new rules, HMRC will have the power to refuse or suspend registration if firms fail to meet certain standards. The ICAEW has already managed to persuade HMRC to adjust this requirement from its original form, as proposed in July’s draft legislation.

Another major concern is the introduction of a criminal offence for promoting tax arrangements deemed to have 'no reasonable prospect of success'. The ICAEW argues this could unfairly criminalise honest mistakes, given the complexity of tax advice. They also warn that the absence of a 'proportionality test' might force firms to close and disrupt long-standing client relationships over minor or historical errors. The ICAEW and other business groups claim the rules have not been adequately consulted upon. They argue that firms face significant compliance costs and operational burdens, with insufficient time to develop and test new systems before implementation. Without further delays and a full impact assessment, they fear the measures could cause widespread disruption.

The ICAEW is calling for the Finance Bill’s implementation to be postponed until 2027 at the earliest. They insist on further consultation and a detailed assessment of the potential impact on firms and taxpayers. Without these changes, the group warns, the proposals risk causing serious harm to compliant businesses and professionals.