This setting used to be there in administration menu of moodle 1.5 six years ago - you could check first the date of post you replied
The setting Helen was talking about is found in moodle 1.9.X ( I suppose it's your current version ) from Administration > Security > Site policies
List of allowed tags on the other hand is set in lib/weblib.php somewhere near line 95 and global
$ALLOWED_TAGS
( which you should not change if you think twice the security risks... )