ICAEW goes alone on tax avoidance disciplinaries

THE ICAEW’S DECLARATION that tax avoidance will be treated as a disciplinary issue in its latest guidance on the subject will have been music to the Exchequer secretary’s ears.

While the institute will not, of course, be actively policing its members’ activities –  instead relying on complaints from clients and colleagues – it very much nailed its flag to the government’s mast with its stance.

The implications for members are intriguing, especially from a body that has to date never embarked on disciplinary proceedings for involvement in tax avoidance.

Should a member be involved in a serious public-interest case of ‘avoidance’, it will be handed to the Accountancy and Actuarial Discipline Board (AADB) for consideration.

However, Frank Haskew, head of the institute’s tax faculty, is keen to stress there has been no dramatic change in its position on avoidance. Instead, he says, the guidance was reiterating the ICAEW’s view, reminding members of its code of ethics.

He has also been quick to allay the fears of members who expressed concerns that failing to draw clients’ attention to all available options could see them held negligent. Contrived schemes will not fall foul of that rule, he says.

Overall, it appears there are some who would agree with the ICAEW’s general views on avoidance. Indeed, Chas Roy-Chowdhury, head of tax at ACCA, has said as much.

However, his institute will not be making avoidance a disciplinary issue for its members, nor will ACCA be playing moral arbiter of those acting within the law.

For Roy-Chowdhury the line between what is acceptable tax planning, and what is not, needs to be drawn and the vague elements in the government’s anti-avoidance legislation requires more definition. As it stands, he says, it is very difficult to know what the ministers mean when they bring morality into the equation.

Exchequer secretary David Gauke’s assessment at the Policy Exchange think tank earlier this month that “a trade-off must be struck between fairness and certainty” is unlikely to bring clarity to those muddy waters.

ACCA’s stance is echoed by Derek Allen at ICAS, with the Scottish institute reticent to take a similar step to the ICAEW without more definition. However, Allen hastened to add that guidelines are being carefully considered north of the border by the institute’s tax taskforce and ethics team, which it is hoped will “further outline the unintended consequences of tax planning”.

The ICAEW, then, has taken a bold step in making avoidance a disciplinary issue. In doing so, it sees its code of ethics take on greater significance, with the onus on members to make sound judgement calls over which schemes are acceptable. The true test, though, will come when the first case is brought before Moorgate Place’s disciplinary panel.

Image credit: Shutterstock

Related reading