Flashcards in Module 13 Professional Conduct Deck (18)
What are the responsiblity of tax advisers?
Tax advisers operate in a complex business and financial environment and a core purpose of the tax system is to fund public services and to ensure the good health of our economy and society.
Tax advisers therefore have a responsibility to serve their clients' interest whilst upholding the profession's reputation and the need to take account of the wider public interest
What are the five fundamental principles of tax practicioners?
Integrity - be straightforward and honest in all professional and business relationship
Objectivity - to not allow bias, conflict of interest or undue influence of others override professional or business judgements
Professional competence and due care - maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards
Confidentiality - respect the confidentiality of information and not disclose/abuse that knowledge unless there is a legal or professional right to disclose
Professional behaviour - company with relevant laws and regulations
How does materiality work in Tax?
Tax law does not specifically recognise the concept of materiality. Whether or not an amount is to material depends on the facts and circumstances of the case.
Who does the responsiblity of a tax return lie with?
Always with the taxpayer
How to response to official requests from tax authorities?
Tax adviser owe their client a duty of confidentiality, this is also the case for previous clients.
Consent should be sought before sharing any information
When dealing with informal quests - the adviser can only disclose information with the clients permission
A statutory request - if advised to client then the adviser need to advise the client how to comply and what options are available to the client
If requested to the adviser then this overrides their duty of confidentiality for their client
If HMRC is seeking to enforce disclosure by removing data, the tax adviser should seek legal advice before permitting the removal.
Errors - this can be made by client, tax adviser or HMRC
If a client overpaid tax, the client should be made aware and advise about making an overpayment claim.
If the error was caused by hMRC and the correction causes additional cost, they can claim this back.
What is the process when an error is identified?
Discuss with client
Identify if it is trivial (does cost of remedy exceed tax involved < £200 ?)
Do we need authorisation by client to disclose the error?
If no then disclose to HMRC
If yes then:
Give oral advice if client unwilling
Give written advice if client unwilling
Cease to act if client continues to refuse
Advise client you can no longer act for them
Notify HMRC cease of acting
Consider reporting to HMRC whether previous reports/files are reliable
Consider repsonse to professional enquiry letter
What are the five standards for tax planning in relation to professional conduct relating to tax
Client specific - tax planning should be based on a realistic assessment of facts
Disclosure and transparency - tax advice cannot be based on HMRC knowing less facts
Advising on tax planning arrangements - tax advisers must not create, encourage or promote tax plannaing arrangements that are contrary to the clear intention of the tax system
Professional judgement and appropriate documentation - keep notes of a timely basis of the rationale for judgements exercised
What is the penalty for a tax member for dishonest conduct?
civil penalties of up to £50000
HMRC can also access members working papers if the member has been issued with a "conduct notice" relating to dishonest conduct
What is the purpose of letter of engagement?
This creates a contract and sets out both the client's and the member's responsiblities
A member can act on behalf of client when dealing with HMRC if client completes "Form 64-8 Authorising your agent"
Members should also keep detailed notes of all meetings and telephone conversations with their client, HMRC nad other parties.
What needs to be done when advisers change?
The new adviser should obtain the proposed client's authorisation to communicate with the previous adviser (professional clearance letter) to gather details of new clients previous returns and accounts, outstanding enquiries, claims in place and other relevant information.
If client refuses this, the member should refuse to accept the client.
If a member receives a request for information, they need permission from the past client to disclose this, if refused then the new member cannot act for the client.
When are separate engagement letters needed?
Separate letters are required when the firm provide tax services to:
Parternership and the individual partners
a company and its shareholders
a company and its directors
a husband and wife/civil partners unless they both agree to be dealt together
What should the engagement letter include?
General terms of business
Limited liability clause
Identify the first tax year the tax adviser is responsible for
What extent the adviser will go for previous returns
The responsibility of the taxpyaer
Scope of tax advisers responsiblities
The task for which the adviser has been appointed
Fees and billing arrangements
The requirement to report to NCA
What risk assessment procedure should tax advisers follow before accepting new clients?
They should consider:
The clients personal circumstances, business situation, financial standing
Their integrity and attitude to disclosure in regard to compliance with tax law
Whether the adviser have the skills and competence to service and meet the need of the client
What criteria should be met before tax adviser offer advice?
Only when they have an adequate understanding of that clients personal and business circumstances and tax position
What is a significant opinon?
A significant opinion is one in respect of which either:
The amount of tax at/potentially at stake and there is a real risk that a contrary view could be reached
the matters advised are of sufficient importance to the client to merit a second opinion
There is aggresive tax planning
What should the tax adviser do when there is significant opinion to be given?
Consult with fellow professionals (maybe an independent partner from the firm)