From 1 April 2026, tax advisers face unlimited penalties and public naming for “sanctionable conduct.” If you rely on external tax advice, this changes the game.
On Wednesday, one of the most significant changes to the UK’s tax advisory landscape in a decade takes effect. The Finance Act 2026, specifically sections 250–254 and Schedule 22, replaces the old “dishonest conduct” regime with a far broader concept: sanctionable conduct.
The practical impact? HMRC can now investigate, fine, and publicly name tax advisers at a lower threshold than ever before. And if you’re a CFO, finance director, or business owner who depends on external tax advice — which is most of you — this matters enormously.
What’s Actually Changing
Under the old rules (Schedule 38, Finance Act 2012), HMRC could only act against advisers engaged in dishonest conduct. The bar was high. You essentially had to prove the adviser was deliberately lying or cheating.
The new regime drops “dishonest” and replaces it with “sanctionable.” A tax adviser now engages in sanctionable conduct if they do something — or fail to do something — with the intention of bringing about a loss of tax revenue.
That covers:
- Helping clients account for less tax than legally owed
- Securing more tax relief than clients are entitled to
- Delaying tax payments beyond their due date
- Accelerating tax relief claims ahead of entitlement
On the surface, this sounds reasonable. Nobody should be helping clients dodge their obligations. But the devil, as always, is in the drafting.
Why the Tax Profession Is Nervous
The ICAEW has raised significant concerns about how broadly the legislation is drawn. Their worry — and it’s a legitimate one — is that the new rules could potentially catch advisers who take a different but credible legal interpretation of complex tax law, or who disagree with HMRC’s view of what the legislation requires.
Tax law is not mathematics. Reasonable professionals regularly disagree on the correct treatment of a transaction. Two equally competent advisers can look at the same set of facts and reach different conclusions — both acting in complete good faith. The question is whether HMRC’s new powers leave enough room for that professional disagreement, or whether the temptation to use the broader threshold as a compliance lever will prove irresistible.
Some reassurance was offered during the Finance Bill debates. Dan Tomlinson MP, the Exchequer Secretary to the Treasury, stated that the changes “will not affect advisers who act in good faith, or who take a credible view as to what the law requires of their clients.” That’s welcome language, but it’s parliamentary commentary — not legislation. The statute itself is what HMRC will apply in practice.
HMRC has published high-level guidance but the detailed technical guidance that practitioners actually need hasn’t materialised yet. The rules take effect in two days. That’s not ideal.
The Enforcement Arsenal
Here’s where it gets teeth.
File access notices. Where HMRC has “reasonable grounds” to suspect sanctionable conduct, it can demand access to an adviser’s working papers and client files — including files relating to former clients. The trigger isn’t proof. It’s suspicion, with reasonable grounds. What constitutes “reasonable grounds” remains undefined in the guidance published so far.
Penalties. If HMRC determines sanctionable conduct occurred, it will issue a conduct notice and calculate a penalty based on the potential lost revenue. The minimum penalty is £7,500. The maximum for a first offence is £1 million. After six or more penalties, it becomes unlimited.
There are also daily penalties for failing to comply with file access notices, plus up to £3,000 per inaccuracy found in documents.
Public naming. Any penalty above £7,500 triggers potential publication of the adviser’s details on GOV.UK. HMRC also has discretionary power to publish in other circumstances. For a professional services firm, reputational damage from a GOV.UK listing could be more devastating than the fine itself.
Stacking. One area the ICAEW has specifically flagged: because the rules apply to both organisations and individuals, HMRC could theoretically impose penalties on the firm and the individual employee for the same instance of sanctionable conduct. HMRC hasn’t clarified whether it intends to do this. ICAEW is pushing for clarity in the detailed guidance.
What This Means for CFOs and Business Owners
If you’re on the advisory side, the implications are obvious — you need to review your compliance frameworks, documentation practices, and internal quality controls before Wednesday.
But if you’re a consumer of tax advice, this matters too. Here’s why:
1. Expect more conservative advice. When advisers face unlimited personal penalties for getting the call wrong, the rational response is to move toward HMRC’s interpretation on borderline issues. That may cost your business money in the form of higher tax bills, but it’s the logical risk adjustment.
2. Documentation becomes everything. Advisers will want — and should want — clear paper trails showing the basis for their advice, the alternatives considered, and the reasoning for the position taken. If your adviser starts asking for more detailed instructions in writing, that’s not bureaucracy. That’s sensible risk management.
3. Review your adviser relationship. This is a good moment to evaluate whether your tax adviser has the resources, quality controls, and professional standards to operate confidently under the new regime. Smaller firms without robust internal processes may face disproportionate risk.
4. The “Big Four premium” may widen. Larger firms can absorb the compliance costs of the new regime more easily. Smaller and mid-tier firms face a tougher calculation. Over time, this could reshape the competitive landscape of tax advisory — potentially concentrating more work with larger practices.
5. Watch for defensive pricing. If advisers are carrying more risk, expect that to be reflected in fees. The cost of professional indemnity insurance for tax advisory work is likely heading in one direction.
The Bigger Picture
This change sits within a broader pattern. HMRC is simultaneously:
- Rolling out mandatory agent registration, requiring all tax advisers to register with HMRC
- Strengthening standards for tax software, with new requirements around accuracy, data accountability, and fraud prevention
- Pushing Making Tax Digital deeper into the self-employed and landlord population
- Implementing the crypto asset reporting framework (CARF) for digital assets
The thread connecting all of these is HMRC’s shift from a reactive to a proactive compliance model. Rather than waiting for errors to surface in tax returns and then chasing corrections, HMRC wants to prevent errors at source — through better software, registered and accountable advisers, and real-time digital reporting.
The sanctionable conduct regime is the enforcement backbone of this strategy. If advisers know that HMRC can access their files on suspicion, fine them up to seven figures, and publish their name on GOV.UK, the incentive structure changes dramatically.
Whether this produces better outcomes for the tax system or simply creates a more cautious, more expensive advisory market remains to be seen. But from Wednesday, the rules are real.
What to Do This Week
If you work with external tax advisers:
- Ask them directly how they’re preparing for the new regime
- Review engagement letters for any updated terms or risk disclaimers
- Ensure your own records are clean — if HMRC accesses your adviser’s files, your transactions will be visible
- Budget for potential fee increases in the next advisory cycle
If you’re an adviser reading this: good luck. The profession needs the detailed guidance HMRC has promised. Until it arrives, document everything and keep your professional body close.
Mark Hendy is a PE-facing CFO and the founder of Tanous Limited. For advisory work on tax, finance, and compliance, get in touch.