The Global Impact Of The UK's New Tax Adviser Registration Regime

The UK's tax authority, HM Revenue & Customs (HMRC), has confirmed that the requirement for UK and non-UK firms of tax advisers to register with HMRC will not apply to asset managers and other firms in the financial services sector before 31 March 2027. This postponement follows representations made by industry sector bodies and advisers as to the difficulties that financial services firms may have in understanding how they are affected by the new rules.

HMRC has indicated that the reason for delay is to give it time to work through the issues as to how the mandatory registration regime should apply to financial services firms. Managers should therefore also take this opportunity to get to grips with the requirements of the new regime – which they might be forgiven for expecting would not apply to them – and to start thinking about the actions they may need to take to comply with their obligations in the future.

In Depth

Definition of a 'tax adviser' under the new regime

Under legislation introduced in Finance Act 2026, a firm that is a 'tax adviser' (as defined) and interacts in any way with HMRC is required to register with HMRC.¹ Interaction with HMRC comprises any communication with HMRC of any kind in relation to the tax affairs of another person.

Despite what you might expect, the new registration regime potentially affects asset managers and other financial services firms, because the definition of a 'tax adviser' includes any organisation which, in the course of its business, assists another person with their tax affairs. Relevant activities include:

• Advising another person in relation to tax;
• Acting as an agent on behalf of another person in relation to tax; and
• Providing assistance to another person with any document relied on by HMRC to determine the other person's tax position.

These criteria are likely to bring within scope of the tax adviser registration requirement any asset manager who interacts with HMRC (in any way) in relation to the affairs of the investment manager's funds and clients. Relevant activities might include an investment manager's applications on behalf of clients for reporting fund status, requests for HMRC to confirm that certain conditions of the investment manager exemption will be treated as met, and clearance applications under the share-for-share exchange or tax-free reorganisation provisions in respect of fund mergers or reorganisations, among others.

It is important to note that registration with HMRC is required for any 'tax adviser' firm which interacts with HMRC, regardless of where in the world that tax adviser or its clients are located. US asset managers, for example, with no activities in or other connection to the UK, could be required to register with HMRC and meet onerous registration conditions (see further below) before they can have any communication with HMRC on behalf of their funds and clients.

Scope of the tax adviser registration regime

The scope of the registration itself is also onerous. Registration requires a tax adviser firm to identify its 'relevant inpiduals' as part of the registration. These are all inpiduals who play a significant role in managing the tax adviser activities of the firm. Firms with more than five 'officers' (i.e., directors or LLP members) must identify at least five officers as relevant inpiduals, together with all other persons (officers or not) who meet the definition of a relevant inpidual.

Once the relevant inpiduals have been identified to HMRC, the tax adviser firm and every relevant inpidual must also meet the registration conditions. The most significant condition is that every relevant inpidual (and the firm itself) must be up to date with their own tax returns and tax payments. This applies wherever in the world a firm or a relevant inpidual files tax returns and pays taxes. For example, a US taxpayer who was a relevant inpidual of a US asset manager would cause the US manager to be non-compliant with the registration condition – and at risk of suspension of its registration – if that taxpayer were late in filing their US tax return with the IRS.

The registration conditions are ongoing requirements. HMRC has the power to suspend a tax adviser firm's registration and issue a compliance notice in the event of a breach of the registration condition which is not quickly rectified (such as an overdue tax return) – and intends to monitor compliance with the registration conditions by firms and relevant inpiduals. Firms whose registration has been suspended are required to notify their clients of the suspension (with a penalty of £5,000 per client if they fail to do so) and can also be subject to financial penalties if they attempt to interact with HMRC whilst suspended.

Impact on asset managers and financial services firms

The mandatory HMRC tax adviser registration requirement, as currently drafted, would seem to require asset managers and other financial services firms to register with HMRC as 'tax advisers' – including a substantial number of US and other non-UK firms who might have some occasional communications with HMRC – and meet the onerous requirements of the registration regime. It is hard to believe that this is what is intended by the legislation.

It is therefore welcome that HMRC has decided to delay the introduction of the registration regime for financial services firms until April 2027 and intends to use the time before then to ensure that the requirements of the regime for such firms are "proportionate and workable" and that the regime applies only where intended.

Nonetheless, asset managers in the UK and in other countries who might have any communications with HMRC in respect of their funds and clients should start to familiarise themselves now with the requirements of the registration regime, such as the identification of relevant inpiduals, and follow developments over the next year. Asset managers and other relevant financial services firms should ensure they are suitably prepared to fulfil their obligations if and when they come within scope of the registration regime in April 2027.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.