From 1st April 2026, HMRC has a new and considerably wider set of powers to deal with tax advisers who deliberately help clients pay less tax than they owe. The regime, known as sanctionable conduct, is set out in Schedule 22 of the Finance Act 2026 and replaces the old dishonest conduct rules that had been in place since 2012.
What The Regime Introduces
Under Schedule 22, HMRC can penalise a tax adviser it finds has intentionally facilitated a loss of tax revenue. A first offence carries a penalty of between £7,500 and £1 million, and where the penalty exceeds £7,500, HMRC must also publish the adviser’s details on GOV.UK.
Separately, HMRC has the power to access a tax adviser’s files where it has reasonable grounds to suspect sanctionable conduct. Where the documents produced contain an inaccuracy that was deliberate or careless, HMRC can charge a penalty of up to £3,000 for each one found.
It is worth being clear about what the regime is actually aimed at. The sanctions themselves apply to intentional dishonesty, not to genuine mistakes. HMRC has said explicitly that a firm trying to do the right thing and getting it wrong does not fall within scope.
What Matters In Practice
For most firms, the sanctions threshold itself is not the relevant concern. The penalty regime is aimed at intentional dishonesty and was never designed with mainstream, well run practices in mind.
The file access power is a different matter. It operates at a much lower threshold than the sanctions themselves, requiring only reasonable suspicion rather than proof of wrongdoing. That means a firm can be asked to produce its working papers without HMRC having established, or even alleged, that anything improper has taken place.
This is where the practical exposure sits. A firm with no structured documentation has no protection once files are examined, regardless of how sound its underlying advice actually was. Without a clear record of the reasoning behind a position, there is nothing to point to if HMRC asks the question.
A defensible audit trail addresses this directly. Clear, contemporaneous records of what advice was given, and why, limit a firm’s exposure whether or not sanctionable conduct is ever alleged. In effect, the file access power creates a practical case for maintaining that audit trail across the board, not just for the small minority of advisers the sanctions regime is actually designed to catch.
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