HMRC has released guidance on sanctionable conduct by tax advisers, effective 1 April 2026, outlining how it will investigate deliberate non-compliance, the penalties involved and when details of advisers may be published.
The UK’s HM Revenue & Customs (HMRC) has published guidance on handling tax adviser sanctionable conduct, effective from 16 March 2026. From 1 April 2026, HMRC can take stronger action against advisers who deliberately contribute to tax non-compliance that causes, or is intended to cause, a tax loss.
A tax adviser is defined as an individual or organisation that assists others with their tax affairs. Sanctionable conduct includes knowingly claiming repayments a client is not entitled to or submitting incorrect tax returns on a client’s behalf.
HMRC Investigations and penalties
If HMRC suspects sanctionable conduct, it may issue a file access notice requiring working papers and audit files used to prepare a client’s accounts. A single inaccuracy in these papers can lead to a penalty of up to GBP 3,000; multiple inaccuracies can incur separate penalties for each. Failure to provide the papers can result in an initial GBP 300 penalty, followed by daily fines of up to GBP 60, or up to GBP 1,000 daily in serious cases.
If HMRC confirms sanctionable conduct, the adviser will receive a conduct notice and may face penalties calculated based on the potential lost revenue (PLR) caused. The conduct notice can be withdrawn if HMRC does not issue a penalty within the time limit or at any other point.
Penalty Framework
Penalties are based on the number of previous sanctionable conduct charges and the PLR:
- 1 penalty: up to 70% of PLR, maximum GBP 1 million
- 2–5 penalties: up to 85% of PLR, maximum GBP 5 million
- 6 or more penalties: up to 100% of PLR, no maximum
Where the PLR cannot be determined, the minimum penalty is GBP 7,500. HMRC may also use previous penalties issued within four years to calculate increases. All penalties expire 20 years after issuance.
Publication of penalties
Advisers charged more than GBP 7,500 must have their details published on GOV.UK, with advance notice from HMRC. Factors considered in penalty calculations include the adviser’s response to file access notices, cooperation in determining the tax loss, and prior sanctions.
