HMRC should consider making pension professionals exempt from new legislation that would require 'tax advisers' to register with HMRC, the Society of Pension Professionals (SPP) has said. 

The government has been holding a technical consultation on draft legislation requiring tax advisers who interact with HMRC on behalf of clients to register and meet minimum standards from 1 April 2026, building on its initial consultation on this issue in May 2024.

However, the SPP said that the current drafting of the legislation could bring into scope a whole range of individuals and firms simply because they provide basic assistance that mentions tax, warning that this could have several unintended consequences.

In particular, the SPP suggested that the wording could mean that actions taken as part of general pensions administration by a firm appointed by trustees as a third-party administrator will fall within scope of this legislation.

It also said that, depending on the interpretation of this legislation, other information about tax provided in pursuance of the Occupational Pension Schemes (Disclosure of Information) Regulations 2013 and general member education may also be brought into
scope.

Given this, it cautioned that, without some other test to limit the scope, there may be a number of unintended consequences of drafting legislation so broadly. with a "considerable" potential impact given the size of the pension market.

"When so much economic activity has a taxation consequences a great many individuals or firms may inadvertently find themselves as breaching a law that they may not have been aware of," the SPP stated.

"There is a very tangible risk of pensions professionals, who HMRC previously confirmed were not the intended target audience for these proposals, being inadvertently captured by the proposed new regulatory regime."

The SPP's response pointed out that whilst an exemption for payroll professionals has been introduced to the legislation, no such exemption has been granted for pension professionals, raising concerns over the scope of the legislation as a result. 

"It is clear that the work of ordinary third-party pensions administration and basic member guidance should also be exempt from this legislation in the same way that those providing payroll or other tax or accounting software to a client have been granted an exemption," the SPP stated.

"The service delivered by pension scheme administrators, who are broadly a human equivalent of software in that they are complying with legal requirements on behalf of their trustee clients who appointed them."

The SPP also pointed out that HMRC have recently indicated a willingness to consider further exemptions for such third-party administrative work.

Given this, it said that an exemption could be added to the draft to ensure that a tax adviser does not contravene section 2(1) where the adviser only interacts with HMRC as an authorised practitioner on HMRC’s Managing Pension Schemes Service in relation to one or more registered pension schemes.

The SPP also pointed out that many pension firms and advisers will already be regulated by the Financial Conduct Authority, which means they have to comply with a number of high level principles, all of which bear on the key issues of standards with which this legislation is principally concerned. 

"It therefore makes little sense to impose an additional, duplicate burden of regulation here," the SPP stated.  

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