Committee Co-Chair Carly Barnes-Short Contributes to TaxWatch Report on the Regulation of the Tax Advisory Market
31 March 2025
Westminster, April 2025– Carly Barnes-Short, co-chair of The Investment Fraud Committee, was recently interviewed by TaxWatch for their recent report, Regulation of the Tax Advisory Market: The Effect of Non-Regulation and the Case for Change. The report highlights the serious risks posed by the minimal regulation in the UK tax advisory market, revealing how this lack of oversight can lead to significant economic harm, including investment fraud and misleading advice to taxpayers.
One of the key findings of the report is the alarming impact that unregulated or poorly regulated tax advisers can have on taxpayers. Specifically, fraudulent tax advisers have caused widespread financial damage to individuals and businesses, particularly in the realm of research and development (R&D) tax relief claims, where one-quarter of claims were found to be erroneous or fraudulent in 2020-21, costing the UK economy over £1 billion in lost tax revenue.
In her interview with TaxWatch, Carly emphasised the need for stronger regulation to protect taxpayers from investment fraud Carly said:
"Investment fraud victims often face not only the financial burden of fraudulent advice but also the emotional and psychological toll of feeling betrayed by trusted professionals. In the current tax advisory market, individuals are exposed to substantial risks when tax advisers operate outside of a regulatory framework. This creates a situation where fraudsters and can exploit a lack of oversight to mislead and defraud taxpayers, resulting in devastating financial losses. A more regulated, transparent system would better protect investors and ensure the integrity of the market."
The TaxWatch report calls for a new independent regulatory body for tax advisers in the UK, ensuring that all practitioners are properly qualified and monitored. This would address the gaps in consumer protection, prevent misleading tax claims, and reduce the significant economic harm caused by fraudulent or erroneous advice.
Carly further explained:
"Without strong oversight, we leave the door open for unethical advisers to exploit vulnerable taxpayers. A new regulatory system would help prevent such exploitation by providing clear standards for tax advisers, better protecting investors, and enhancing consumer confidence. This is not just about protecting individual taxpayers; it's about safeguarding the UK’s economy from billions of pounds in lost tax revenues."
The report highlights a tax advice market that operates like a regulatory Wild West, leaving individuals and businesses vulnerable to poor or exploitative advice.The TaxWatch report also draws on international models, including Australia’s robust regulatory approach, which combines mandatory registration, effective enforcement, and real-time data sharing, as a blueprint for potential reforms in the UK.
Based on its findings, TaxWatch recommends the creation of an independent regulatory body with appropriate statutory powers that would:
- Require registration and minimum qualification standards for all tax advisers
- Implement robust monitoring of compliance with professional standards
- Enable effective data sharing with HMRC to identify emerging risks
- Include proportionate enforcement powers
- Enhance consumer protection through accessible complaints processes and improved safeguards
The report concludes that these reforms would create a regulatory environment that better protects taxpayers while supporting qualified tax advisers in their practice. Effective regulation could help reduce economic impacts on individuals and businesses resulting from poor advice, while also addressing aspects of the tax gap related to non-compliance.
TaxWatch urges the government to prioritise these reforms, noting that the billions lost to non-compliance facilitated by unregulated advisers represent a significant opportunity to strengthen public finances while protecting vulnerable taxpayers from exploitation and getting into ruinous tax debt with HMRC.
New data released by Action Fraud, in partnership with the Pension Scams Action Group (PSAG), reveals an alarming rise in pension fraud across the UK. In 2024 alone, £17,567,249 was reported lost to pension-related scams — that’s an average of £48,129 per day, with each victim losing around £33,848. These are not just numbers. They represent the hard-earned savings of people approaching or entering retirement — and the consequences are deeply personal. How Pension Fraud is Being Carried Out Fraudsters are becoming more organised, targeted, and convincing. Two core methods stand out in current scams: 1. Investment Fraud Pressure Tactics Scammers pressure individuals into transferring or investing their pension pots quickly. Common signs include: - Promises of high or guaranteed returns - Claims of limited-time opportunities - Urgency to act “before it's too late” - Dismissal of risk or complexity These schemes are designed to disarm savers, override critical thinking, and push through illegitimate transfers before they can be questioned. 2. Account Takeovers Through Impersonation In more technical scams, fraudsters impersonate savers and gain control over their pension accounts. Tactics often include: - Collecting personal details via phishing, cold calls, or data breaches - Posing as legitimate pension providers or advisers - Redirecting or withdrawing pension funds once access is secured These crimes are not only financially devastating — they’re also emotionally distressing and difficult to recover from. Why This Matters Pension fraud is more than a financial issue — it is a national security and well-being concern. Financial and emotional harm These crimes affect victims' long-term financial security and mental health, leading to stress, anxiety, and even breakdowns in later life planning. The scale of the problem Over 500 reports were filed in 2024, with nearly £18 million in confirmed losses. Fraudsters are increasingly sophisticated and persistent. Vulnerability of targets Many victims are older, nearing retirement, or managing lump sums for the first time. This makes them prime targets — especially if they lack digital literacy or experience with investment products. What Individuals Can Do to Protect Themselves PSAG and Action Fraud recommend the following steps for anyone managing their pension savings: Secure your pension account Use strong, unique passwords and enable two-step verification (2SV) on your online accounts. Be wary of unsolicited contact If someone contacts you unexpectedly about your pension — especially offering a “review” or “investment opportunity” — hang up and report it. Spot pressure tactics High returns, urgent decisions, or limited-time deals are all red flags. Reputable advisers never rush you. Stop. Think. Check. Before making any changes to your pension, take the time to: Consult someone you trust Verify financial advisers via the FCA Register Get second opinions from regulated professionals The Role of the Investment Fraud Committee These figures underscore the critical role of the Investment Fraud Committee in tackling this growing crisis. Our priorities include: Raising public awareness through targeted campaigns. Strengthening security standards Enhancing regulation Supporting victims Pushing for enforcement against scammers through coordination with law enforcement and financial regulators Campaigning for HMRC Policy change and fair and affordable solutions for scam victims. Final Thoughts Pension fraud is not a marginal issue — it’s costing ordinary savers nearly £50,000 a day, and affecting hundreds of people each year. Without urgent, coordinated action, that number will only rise. Let’s use this data as a turning point. Together, the Investment Fraud Committee, financial services sector, law enforcement, and the public can reduce these losses — and safeguard the futures people have worked a lifetime to build. Read more here
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