UK tax professionals will soon be required to be registered with HMRC before they are permitted to interact with the tax authority on behalf of clients. This requirement will be introduced through the Finance Bill 2025/26 and represents a significant change in how tax advisers are regulated in the UK. The draft Finance (No. 2) Bill details the new rules in Part 7 and Schedules 19 and 20.

The new legislation is intended to ensure that all tax advisers who deal with HMRC meet minimum eligibility and conduct standards. It forms part of HMRC’s wider programme to raise standards across the tax advice market and to protect taxpayers from advisers who are unable or unwilling to meet those standards. The government is modernising existing systems and creating a single digital registration route to support the new regime. HMRC estimates that around 85,000 tax agent businesses will be affected.

Tax advisers will be required to register from May 2026, with a transition period of at least three months. Registration will be required before any adviser can have client-related contact with HMRC, including digital interactions, telephone calls, written correspondence or the submission of tax returns. The rules will apply regardless of whether the adviser or the client is based in the UK or overseas.

The scope of the registration requirement is wide and covers businesses providing professional tax services where they offer tax advice or guidance, represent clients in their dealings with HMRC, or prepare documents that determine a client’s tax position. However, the legislation provides for limited exemptions. These include in-house tax teams dealing only with their employer’s affairs, software providers whose involvement is purely technical, professionals working exclusively in customs and import VAT matters, VAT representatives, and advisers whose work is restricted to group tax matters or tribunal proceedings.

To obtain and maintain registration, tax advisers will need to meet a number of eligibility conditions. These include being fully compliant with their own tax affairs, with no outstanding tax returns or unpaid liabilities, although time-to-pay arrangements that are being adhered to will be acceptable.

Advisers must not be subject to sanctions imposed by HMRC in relation to tax avoidance activities, nor be refused dealings by HMRC. Additional conditions include having no unspent convictions for tax-related offences, not being disqualified as a director in the UK or any other jurisdiction, not being subject to insolvency proceedings where an insolvency practitioner is acting and being registered with an appropriate anti-money laundering supervisory authority.

Crucially, these eligibility requirements will apply not only to the firm itself but also to its senior managers. HMRC defines senior managers as those with genuine control or influence over the tax advice provided by the business. This includes company directors and shadow directors, members and shadow members of limited liability partnerships with management functions, and partners or those holding themselves out as partners in a partnership. While firms will register as legal entities, HMRC will carry out checks on relevant individuals in senior positions. Most employees will not be subject to individual eligibility checks.

HMRC will be given significant enforcement powers under the new regime. Registered advisers will be required to provide information on request and to notify HMRC of any changes that affect their eligibility. HMRC will be able to suspend or prohibit advisers from acting where the registration conditions are not met, either temporarily or permanently. Advisers who fail to register after receiving a compliance notice will face a penalty of £5,000, increasing to £10,000 for repeat breaches within a two-year period. Acting while suspended or prohibited will also attract a £10,000 penalty.

Where HMRC considers that a breach is attributable to the actions or inaction of a senior manager, penalties may be imposed directly on that individual, who will be personally liable. In addition, advisers whose registration is suspended for more than 30 days will be required to inform their clients within 60 days. Failure to do so will result in a further £5,000 penalty.

Tax advisers will have the right to request a review of HMRC decisions and, following that review, to appeal to a tribunal. In some circumstances, temporary reinstatement of registration may be granted while an appeal is ongoing.

Although the new rules will not take effect until 2026, firms should begin preparing now by reviewing their own compliance position, ensuring that anti-money laundering supervision is in place, and identifying senior managers who may be subject to checks.

Further guidance on the registration process is expected to be issued by HMRC ahead of the transition period.