The danger of criminal complicity

Link: Small practice guide

These are the lack of a de minimus reporting value, in particular any amount of undeclared taxation, and the erosion of client confidentiality given the absence of legal privilege for accountants.

The successful campaign by SPA last summer to put government on notice about these matters has seen many practitioners receive encouraging messages of support from local MPs writing to the Treasury on their behalf.

Hopefully, and despite the seeming intransigence in Treasury responses to these letters, the unexplained delay may mean change is being debated behind closed doors.

The UK remains the only European nation not to include a de minimus reporting level within its money laundering rules. How sensible can this be given anecdotal evidence that already some 60,000 mainly protective reports have been lodged with NCIS, whose team of investigators is statedly capable of handling only a fraction of that level?

Most important is accurate and sensible guidance on how practitioners may practically deal with such all-embracing legislation, such is the anxiety to learn that, for the first time in its eight-year history, SPA has had to close the list for its pre-agm continuous professional education programme this November on ‘an approach to money laundering’.

While various technical groups strive to provide sensible and efficient help sheets and training for practitioners and their staff, one piece of useful guidance to emerge states that errors in a client’s tax affairs should not be regarded as criminal – and hence reported – unless the tax due date has passed.

Until that date, practitioners should work with clients to correct erroneous tax returns submitted.

It appears unlikely that many practitioners will be able to say with absolute certainty that accounts or tax returns contain no errors.

Unless the government allows us to submit accounts that are materially correct and consistently prepared without danger of criminal complicity, we will be forced towards self-preservation – a practice already adopted by some firms in reporting their full list of clients.

This is not an attempt to obstruct reasonable law, but an essential defence against potential criminal implications of the unsuspecting practitioner in their clients’ ‘crimes’. Given no modification to proposed regulations, it may be ‘best practice’ for all of us to follow a similar approach.

What will our professional indemnity insurers expect us to do? Not only would such volume of reports completely overwhelm NCIS, but may also have the effect of masking reports of real substance.

The proposed regulations appear unworkable and government needs to understand this now if the whole process is not to fail before it starts.

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