HMRC's June Employer Bulletin includes a simple warning for employers and business owners: look twice to spot bad tax advice.
That warning matters because the risk does not sit only with obviously aggressive tax schemes. For SMEs, poor advice can show up in everyday decisions: expenses, benefits, payroll treatment, subcontractor arrangements, director payments, VAT positions, employment status, pension handling and claims that sound too easy.
The commercial issue is straightforward. When tax advice is wrong, the business is left carrying the exposure.
Bad advice is not just a technical problem
Bad tax advice can cost a business in more than tax.
It can create penalties, interest, management distraction, damaged lender confidence and awkward conversations with staff, suppliers or HMRC. It can also leave the owner believing a position is safe when the evidence behind it is weak.
That is why adviser checks are becoming part of business control, not just professional preference.
SMEs should know who is advising them, what the advice is based on, whether the adviser is qualified or regulated, and whether the position would still make sense if HMRC asked for the paperwork six months later.
Why it matters
Most business owners do not set out to take reckless tax positions. The danger is usually speed, pressure and trust.
A busy owner hears that something is "standard", "approved", "what everyone does" or "a way to save tax". The advice may sound confident, but confidence is not evidence.
HMRC's wider compliance direction is increasingly data-led. Payroll, VAT, company records, expenses, benefits and digital systems all leave trails. That makes weak advice easier to challenge and harder to explain after the event.
For Genius clients, the practical lesson is not to become tax technicians. It is to build a habit of checking advice before it becomes a liability.
Practical takeaway
Before acting on tax advice, SMEs should ask five basic questions:
Who is giving the advice?
Are they qualified, registered or accountable?
Is the advice written down clearly?
What evidence does the business need to keep?
What happens if HMRC challenges it?
If the answer depends on secrecy, urgency, vague claims or "everyone is doing it", that is a warning sign.
Owners should also keep a clean file for material advice: emails, calculations, assumptions, supporting documents and the decision made. That file does not need to be complicated. It needs to exist.
Conclusion
Bad tax advice is not just a tax department problem. For SMEs, it is a business control problem.
The strongest firms will not wait for a challenge before asking whether their advice is clean, documented and defensible.
Good advice should make the business easier to explain, not harder.
Sources:
https://www.gov.uk/government/publications/employer-bulletin-june-2026/june-2026-issue-of-the-employer-bulletin
https://www.gov.uk/government/publications/hmrc-charter
