Professional bodies update guidance for tax advisers
ICAS and the other leading UK accountancy and tax bodies have published updated guidance on the standards expected of tax advisers and agents.
The guidance has been endorsed by HMRC and sets out clear professional standards in relation to the facilitation and promotion of tax avoidance.
The guidance, formally known as Professional Conduct in Relation to Taxation (PCRT), has been in existence for over 20 years and is regularly updated.
It sets out the high ethical standards which form the core of the tripartite relationship between tax adviser, client and HMRC. It supports the key role members play in helping clients comply with their tax obligations and their broader responsibilities to society. The guidance in the PCRT is based on five fundamental principles:
- Professional competence and due care
- Professional behaviour
For this latest update, the professional bodies have strengthened the existing five fundamental principles by the addition of five new Standards for Tax Planning that members must observe. These include a standard which makes clear that members “must not create, encourage or promote tax planning arrangements or structures that (i) set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation, and/or (ii) are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation.” Such behaviours would lay a member of one of the bodies open to disciplinary action.
This addition to the PCRT responds to the Government’s challenge to the professional bodies, made in March 2015, to take a greater lead in setting and enforcing clear professional standards around the facilitation and promotion of tax avoidance.
In a joint statement, the seven bodies said:
“PCRT has long set out professional and ethical standards which require more of the members of professional bodies than the letter of the law demands, and rightly so. Professionals owe a duty to the society in which they operate as well as to their clients. Our professional rules have long recognised this, for example in requiring the correction of HMRC errors. However, social expectations of behaviour in relation to tax planning have evolved significantly in recent years. Fundamental professional obligations to act with integrity and uphold the reputation of the profession and of clients would not be met if our rules did not also change to recognise this.
“We believe these new Standards for Tax Planning achieve an appropriate balance – making clear to the small minority of tax professionals who continue to facilitate and promote tax avoidance schemes that this behaviour is not acceptable, while enabling the vast majority of advisers to continue undertaking responsible tax planning for their clients to help ensure that they pay the right amount of tax as intended by law. We hope that those tax advisers and agents who are not members of the seven PCRT bodies will also commit themselves to following this code.”
The Government has supported the publication of the updated PCRT. HMRC has also acknowledged that the updated guidance is an acceptable basis for dealings between members of the bodies and HMRC.
This statement is circulated on behalf of ICAS, the Chartered Institute of Taxation, the Association of Taxation Technicians, the Association of Accounting Technicians, the Association of Chartered Certified Accountants, the Institute of Chartered Accountants in England and Wales and the Society of Trust and Estate Practitioners.