Ethics

Question 1

PRCT standards for tax planning

Answer 1

Client specific - Planning should be specific to the client (with the client made aware of risks)

Disclosure & transparency - Disclosures to HMRC should contain all relevant facts

Advising on tax planning arrangements - Accountants should not be involved in planning arrangements that are abusive (benefits not intended by Parliament, or highly artificial and exploit
loopholes)

Professional judgement & appropriate documentation - Accountants should document the rationale for judgements exercised in the
giving of planning advice

Question 2

When to disclose

Answer 2

By law and authorised by client e.g. fraud

By law e.g. legal proceedings, ML

Professional duty
- Comply with quality review
- Investigations

Question 3

Steps when accepting new client

Answer 3

1) Confirm client identity, photo ID, bank statements, vat reg

2) Consider threats e.g. independence, conflict of interest

3) Issue engagement letter - scope, roles/responsibilities etc

Question 4

Professional indemnity insurance

Answer 4

PII regulations sets the minimum amount of indemnity as follows:
 Gross fee income < £600,000  2.5 x gross fee income (minimum of £100,000)
 Gross fee income ≥ £600,000  minimum of £1.5 million.

Question 5

Data protection regulation

Answer 5

• Individuals have to opt in
• Privacy notices must be clear

– Data must not be retained for longer than necessary

– Compliance is monitored by the Information Commissioner’s Office (ICO)

– A Data Protection Officer (DPO) must be appointed by an organisation handling data and they must notify the ICO to be entered onto the register of data controllers

Question 6

Data protection precaution

Answer 6

Passwords kept safe from unauthorised use and
changed regularly

Unusual activity on the client’s HMRC online
account reported immediately

IT equipment kept physically secure

Awareness of how to deal with phishing emails
appearing to be from HMRC

Question 7

Tax planning

Answer 7

Legal tax reduction based on the intended
consequence of legislation
 Making pension contributions
 Using an ISA
 Claiming relief for R&D spend

Question 8

Tax avoidance

Answer 8

Legal tax reduction involving bending the
rules and obtaining a tax advantage not
intended by Parliament
 Certain loss schemes
 Use of circular transactions

Question 9

Tax evasion

Answer 9

Illegal reduction of tax by seeking to
mislead HMRC
 Punishable by penalties, with serious
cases (esp. those involving fraud)
subject to criminal prosecution
 Falls within the definition of money
laundering (see later)

Examples:
 Failing to notify HMRC of taxable
income
 Understating income / overstating
expenditure

Question 10

Anti-money laundering levy - economic crime

Answer 10

Size, annual Uk revenue, Levy

Small = <10.2m = Exempt

Medium= 10.2-36m = £10,000 levy

Large = 36m-1bn = £36,000 levy

Very large = 1bn > £250,000

Question 11

AML Requirements

Answer 11

Register for anti-money laundering (AML) supervision with ICAEW as the appropriate supervisory body

Appoint a Money Laundering Reporting Officer (MLRO)

Train the partners and staff in relation to money laundering legislation

Establish appropriate AML procedures to risk assess and deter money laundering