HM Revenue and Customs (HMRC) have confirmed the intention Payroll Service providers to be registered along with other Tax Advisers from 1st April 2026
New requirements are being introduced for all tax advisers to register with HMRC and meet minimum standards.
So who are tax advisers
According to the UK government, Tax advisers are those who provide professional tax advice and services. They interact with HMRC on behalf of their clients and will now need to register with HMRC and meet minimum standards.
The changes are claimed to be needed to improve HM Revenue and Customs (HMRC) ability to monitor and exclude tax advisers who are objectively unable to meet HMRC’s Standards for Agents and as a result can no longer lawfully act as a tax adviser including the provision of payroll services.
Mandatory registration
Mandatory registration is to start on April fools day, Wednesday 1st April 2026, with at least a three-month transition period. Details are to be communicated in advance to relevant stakeholders such as those providing payroll services.
Tax advisers who do not meet the minimum standards or registration conditions will be suspended from interacting with HMRC on behalf of clients until they meet the minimum standards.
Sanctions may also apply where tax advisers attempt to circumvent the registration requirements or fail to meet HMRC’s minimum registration standards.
Those who breach the new regulations face financial penalties of £5,000 and more for continued offences.
What is meant by interacting with HMRC
Interacting includes:
- contacting HMRC by telephone, post or email;
- sending a message to HMRC through a website or internet portal;
- filing a return, claim, notice or other document with HMRC
- communicating with HMRC in any other way.
This applies to those both from within the UK or overseas.
Where an individual works for an organisation, and interacts with HMRC in the course of a business carried on by that organisation, the interaction is to be regarded as being carried out by the organisation as well as by the individual.
Payroll Software v Payroll Services
This new registration requirement does not apply to in-house payroll. However, some care is needed as some in-house payroll sections offer services to external organisations.
A tax adviser does not contravene the requirement to be registered) where the adviser falls within the definition of tax adviser solely providing payroll software to a client for use in relation to their tax affairs.
The exemption does not apply to payroll service providers as HMRC consider those services to be tax advice.
Registration
Payroll service providers will need to register with HMRC providing information on:
- The name and address of the adviser
- The name of each senior manager of the adviser
- A statement that eligibility is met
- Any other information that may be confirmed as being required.
Eligibility
Amongst the eligibility criteria expected of payroll service companies to enable them to meet these tax advisers requirements, the following may apply:
- does not have any outstanding tax returns or amounts of tax due
- is not subject to a decision by HMRC to refuse to deal with them
- Is not subject to a sanctions in relation to tax anti-avoidance activities
- is not subject to a suspension
- is not subject to a prohibition order
- is not —
- A disqualified directors
- subject to a similar disqualification outside the United Kingdom
- is not insolvent
- does not have an unspent conviction
What about AML compliance
To register the payroll service provider, as a tax adviser, must be regulated for Anti Money Laundering (AML) regulations with a professional body or through HMRC Economic Crime Unit (ECU).
There is no professional regulatory body for payroll service providers.
From April 2026, if there is no AML supervision in place, then no provision of payroll services would be allowed.
Opinion
The proposed regulations to improve the tax advice market specifies a very broad definition on what is tax advice. What is clear in the current drafts is that the provision of payroll services, excepting the provision of software only, captures payroll service companies as acting as tax advisers requiring registration.
With April 2026 only being 8 months away, assessment of the AML requirements is needed to ensure that appropriate education and preparation of those acting as tax advisers take place, clients may need to go through a process of due diligence to align with AML requirements, and various risk assessments be out in place to classify the compliance risks faced in the provision of payroll services.
Identification of those who are to be named as the relevant tax advisers needs to be considered along with their managers. I’m sure more information will be published as we move closer to the 2026 April fools date.
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PAYadvice.UK 29/7/2025