'Clear' tax avoidance guidance for advisers issued by institutes

UPDATED GUIDANCE on the standards expected of tax advisers and agents have been published by leading UK accountancy and tax bodies.

The guidance has been endorsed by HMRC and sets out clear professional standards in relation to the facilitation and promotion of tax avoidance.

The CIOT, ATT, AAT, ACCA, ICAEW, ICAS and the Society of Trust and Estate Practitioners have circulated the information. Know formally as the Professional Conduct in Relation to Taxation (PCRT), the guidance has been updated regularly in its 20 years’ existence.

The seven bodies said in a joint statement: “We believe these new standards achieve an appropriate balance, making clear that tax avoidance schemes and bad behaviour is not acceptable, while enabling many advisers to continue undertaking responsible tax planning to make sure their clients pay the right amount of tax. We hope that those tax advisers and agents outside of the seven PCRT bodies will also commit themselves to following this code.”

The guidance is based on five fundamental principles; integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. It sets out the high ethical standards between the tax adviser, client and HMRC and supports the role of its members. HMRC had recently claimed it would give tougher sanctions to those guilty of tax avoidance.

The professional bodies have strengthened the existing principles with five new tax planning standards for this latest update. These include a clear standard that members “must not create, encourage or promote tax planning arrangements or structures that (i) set out to achieve results 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.”

A member of one of the bodies would be open to disciplinary action if not adhering to these standards. This can be compared to last year as the ICAEW confirmed they had yet to discipline any members for tax avoidance scheme advice.

The added standards respond to the challenge from the government from March 2015 to enforce clearer standards around tax avoidance.

The joint statement concluded: “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. Our rules have long recognised the duty of professionals to clients and society, for example in requiring the correction of HMRC errors. However, social expectations of behaviour in relation to tax planning have evolved recently. Professional obligations to act with integrity and uphold the reputation of the profession would not be met if our rules did not also change to recognise this.”