Ethics

Question 1

fundamental ICAEW ethical principles?

Answer 1

• integrity
• objectivity
• confidentiality
• professional competence & due care
• professional behaviour

Question 2

PCRT?

Answer 2

professional conduct in relation to taxation

Question 3

what is the PCRT for?

Answer 3

includes practical advice about ethical and legal issues arising during tax work

Question 4

PCRT’s 5 standards?

Answer 4

• client specific
• lawful
• disclosure & transparency
• tax planning arrangements
• professional judgement and appropriate documentation

Question 5

client specific?

Answer 5

tax planning must be specific to a particular client’s facts and circumstances

Question 6

lawful?

Answer 6

• members must act lawfully
• members must draw clients’ attention to material legal uncertainties

Question 7

disclosure and transparency?

Answer 7

any disclosure must fairly represent all relevant facts

Question 8

tax planning arrangements?

Answer 8

members must not encourage tax arrangements that:
- go against HMRC’s intention
- exploit loopholes

Question 9

professional judgement and appropriate documentation?

Answer 9

members should keep notes of rationale behind judgements exercised

Question 11

how does an individual dodge conflicts of interest when seconded to HMRC?

Answer 11

• no involvement in matters relating to their employer
• no involvement in matters relating to clients worked with when at HMRC

Question 12

types of tax workers?

Answer 12

agent and principal

Question 13

agent?

Answer 13

prepares document on behalf of client

Question 14

principal?

Answer 14

provides advice on tax consequences of certain courses of action

Question 15

do agents bear responsibility for their client’s documents?

Answer 15

no

they just prepare on client’s behalf

Question 16

do principals bear responsibility for their client’s documents?

Answer 16

yes

principal is liable if advice is incorrect/inappropriate

Question 17

agent/principal risk levels?

Answer 17

agent = low risk
principal = high risk

Question 18

when accepting a new client, a professional accountant should…

Answer 18

• consider potential threats to ethical principles
• consider whether they’e competent enough
• implement safeguards

Question 19

engagement letter?

Answer 19

contract between accountant and client

sets out each party’s responsibilities

Question 20

should there be an engagement letter covering each separate contractual relationship?

Answer 20

yes

Question 21

who has an obligation to protect personal data?

Answer 21

anyone who handles personal data

under data protection act 2018

Question 22

data protection act 2018?

Answer 22

obliges individuals to protect data

overseen by ICO

Question 23

who oversees data protection act 2018?

Answer 23

ICO

information commissioner’s office

Question 24

when must a breach of data protection be communicated?

Answer 24

ICO must be informed of a breach within 72 hours of a breach

Question 25

non-compliance with data protection laws can lead to...

Answer 25

- a criminal conviction - a fine to the higher of 20m or 4% of firm's global turnover

Question 26

principles under data protection act 2018?

Answer 26

- lawfulness, fairness & transparency - purpose limit - data minimisation - accuracy - storage limitation - integrity & confidentiality

Question 27

how does PCRT advise data should be handled?

Answer 27

- computers should be secure - passwords should be kept safe - suspicious emails should be forwarded to HMRC phishing team

Question 28

PII?

Answer 28

professional insurance indemnity protects a member against the cost of settling/defending against a client

Question 29

must a qualified member of ICAEW in public practice have PII?

Answer 29

yes employed members will be covered by their employer's insurance policy

Question 30

minimum indemnity amount if firm's gross fee income is less than 600,000

Answer 30

2.5x its gross fee income (minimum of 100,000)

Question 31

minimum indemnity amount if firm's gross fee income is more than 600,000?

Answer 31

1.5m

Question 32

tax evasion?

Answer 32

criminal offence evading tax through dishonesty

Question 33

what happens if one fails to prevent employees/associated persons from committing tax evasion?

Answer 33

it's a criminal offence

Question 34

how do businesses protect themselves against tax evasion liability?

Answer 34

- risk assessment - introduce further controls - perform due diligence - communicate offences to staff - monitor/review procedures - competent senior management

Question 35

tax gap?

Answer 35

difference between taxes owed and taxes paid

Question 36

what are HMRC using to counter against tax gaps?

Answer 36

data analytics

Question 37

making tax digital? (MTDfB)

Answer 37

will abolish tax returns through introduction of digital tax accounts

Question 38

who's required to use MTDfB systems?

Answer 38

all VAT registered businesses

Question 39

when will making tax digital be introduced for income tax?

Answer 39

tax year 2026/27

Question 40

defences against failing to report money laundering?

Answer 40

- if they don't know money laundering has occurred - if money laundering happened overseas where it is legal - if their safety was threatened

Question 41

ECL?

Answer 41

economic crime levy a levy on entities that are regulated for money laundering purposes levy is used to tackle economic crime charged on regulated businesses based on their UK revenue

Question 42

is ECL deductible for corporation tax?

Answer 42

no

Question 43

ECL %?

Answer 43

- small size (<10.2m) = exempt - medium size (10.2m-36m) = 10,000 - large size (36m-1b) = 36,000 - very large (1bn+) = 500,000

Question 44

when is ECL payable?

Answer 44

if it's based on income in FY24 payment is due on 30Sep25

Question 45

what should happen when HMRC make an error in client's favour?

Answer 45

- member should inform HMRC - warn client of legal implications of not informing - discontinue work with client if they don't comply - keep record of correspondence

Question 46

a deliberate attempt from an HMRC error is..

Answer 46

a criminal offence e.g., undercharged tax/interest

Question 47

what should a member do if a client refuses to make appropriate disclosure of an HMRC error?

Answer 47

- cease to act for client - inform HMRC that you no longer work with the client - consider informing an MLRO

Question 48

threats to fundamental principles?

Answer 48

- self interest - self review - advocacy - familiarity - intimidation

Question 49

safeguards against threats?

Answer 49

- CPD/training - governance - review/monitoring - reporting system

Question 50

money laundering ?

Answer 50

- handling of criminal property - involved with criminal property

Question 51

anti money laundering procedures?

Answer 51

- appoint MLRO - appoint MLCP - register with supervisory body (ICAEW) - internal procedures - whistle blowing system

Question 52

is it an offence to tip off a money launderer?

Answer 52

yes

Question 53

for anti money laundering, how long should records of transactions be kept for?

Answer 53

5 years