Setting up in practice

The CIOT does not require or provide practising certificates for members setting up in business as tax advisers. There are however a number of legal requirements and CIOT membership requirements.  These are set out below together with other guidance which you should refer to when setting up.

If you are also a member of other professional bodies, you will need to check with them to ensure you are meeting their regulations and requirements to run your own practice.

In particular Professional Rules and Practice Guidelines provides guidance on a range of practical issues including practice governance, obtaining clients, advertising and fees and there is guidance on the website on running a tax practice here. 

Legal Requirements

Anti-Money Laundering (AML) Supervision 

  • AML supervision is a legal requirement for those providing tax and accountancy services. The CIOT is a professional body AML supervisor, and we provide information here on first time registration for our members. 
  • As well as registering for supervision there are a number of requirements under the Money Laundering Regulations and associated legislation.  This includes the need to carry out due diligence on clients, risk assessment of clients, maintaining AML training and having written practice risk assessment and policies and procedures documents etc. There is a considerable amount of guidance to assist members on the CIOT website here. 

 Professional Indemnity Insurance (PII) 

  • Members in practice must have PII in place which meets the requirements of the CIOT PII regulations.  The Regulations and further guidance is available here.   
  • The CIOT do not recommend particular PII providers but there are policies available which meet the CIOT requirements and further details are available on the CIOT website here. 

Information Commissioners Office (ICO) Registration, Data Protection & GDPR 

  • To meet legal requirements on the use of data under the General Data Protection Regulations (GDPR) you are likely to need to register with the ICO. Further information on this is available on the ICO website here.   
  • CIOT guidance on GDPR is available here. 

HMRC Agent Access & Interaction

HMRC Agent Registration  

  • Firms providing tax compliance services, will most likely need to apply to HMRC for an agent code. Details of how to request an agent code and how to enrol for the relevant online service are available at: https://www.gov.uk/guidance/self-assessment-for-agents-online-service. 
  • After you have obtained an agent code, you can also register with HMRC for an agent services account here. 
  • Remember, an agent code can be revoked. HMRC is increasingly using this power to maintain high standards that promote tax compliance. Whilst HMRC have their own Standard for Agents members are expected to meet the more comprehensive requirements set out in Professional Conduct in Relation to Taxation.  
  • When applying for an agent code evidence of AML supervision registration has to be provided to HMRC. CIOT supervised firms receive a confirmation email once AMLS registration has been approved and this can be provided to HMRC as evidence of registration. Members may also refer HMRC to the CIOT register of AML supervised firms available on the website here [link coming soon]. If for any reason HMRC do not accept a firm’s documentary evidence please email us at [email protected]. 

Other Requirements and Guidance

Continuing Professional Development (mandatory membership requirement for those in tax practice) 

  • You may have been working in an environment where internal training was arranged and provided by your employer. In your own practice the responsibility for ensuring you keep up to date with changes in the legislation etc and are able to meet the CIOT’s CPD requirements will be yours. You can find the CPD Regulations and guidance here. 

Client Money Requirements (mandatory membership requirement for those in tax practice)  

  • When setting up your business bank account consider whether you will also need to open a separate client account.  If you receive client money, for example tax refunds, it must be kept separately from money belonging to the practice in a bank account clearly designated as a client account.  Chapter 7 of Professional Rules and Practice Guidelines gives more detail. 

Engagement Letters (strongly recommended) 

  • Engagement letters are not a mandatory requirement for members, but we strongly recommend that you use them.  They give protection both to your client and to you. Engagement letter guidance which includes pro forma documents to be tailored by the practice to meet their circumstances is available here. The guidance includes an agreement which can be used where you are acting as a subcontractor and a sample disengagement letter. 

Appointing an Alternate (strongly recommended) 

  • The CIOT recommends sole practitioners appoint an alternate who could take care of the practice should you become incapacitated. Further information in relation to this is included on the CIOT website here. 

Use of the Institute’s Practicemark (optional) 

  • Using your CTA designation and displaying the Practicemark (logo/badge) on your website, emails and letterheads can you help you stand out as an adviser of choice to potential clients. 
  • Please see here for details of who can apply for, and how you can use the Practicemark. 

Other Considerations

  • Please note that the above list is not exhaustive and there will be other obligations to consider such as cyber security, public liability insurance, consumer credit regulations, regulations relating to staff you might have etc. It is also important to keep your own tax affairs up to date.