Chapter 21 PCRT: Submission of Tax Information and tax filings help sheet Flashcards
21.3 Making tax digital
The UK’s tax administration systems are moving to mandatory digital filing. Usually a member will explicitly file in their capacity as an agent, a member is advised to use the facilities available for agents. A member is recommended to forward suspicious emails to HMRC phishing and delete them.
21.4 Taxpayers responsibility
The taxpayer has primary responsibility to submit correct and complete filings. The final decision whether to disclose any issue is down to the client. In annual self-assessment returns or returns with short filing periods, the filing may include reasonable estimates where necessary.
21.5 Members responsibility
A member is responsible for the accuracy of the filing based on the information provided. In dealings with HMRC a member should remember confidentiality and that they have a duty to act in the best interests of their client. A member should act with integrity with HMRC and take reasonable care and exercise professional scepticism when making statements or asserting facts on behalf of a client. When acting as a tax agent they are not required to audit the figures or verify information provided by a client. They should not be associated with the presentation of facts. When dealing with HMRC they should consider whether they need to make it clear to what extent they are relying on information supplied by the client or a third party.
21.6 Materiality
The profits of a trade, profession, vocation or property business should be computed in accordance with Generally Accepted Accounting Principles (GAAP), subject to any adjustment authorised by law. This permit disregarding non-material adjustments in computing its accounting profits. The application of GAAP and therefore materiality does not extend past accounting, materiality cannot be applied when completing tax filings. For certain small businesses an election may be made to use the cash basis instead, for small property businesses the default position is the cash basis. When cash basis is used, materiality is not relevant.
21.7 Disclosure
It may be advisable to consider fuller disclosure than is strictly necessary. The factors involved in this decision include:
• A filing relies on a valuation
• The terms of the applicable law
• The view taken by the member
• The extent of any doubt that exists
• The manner in which disclosure is to be made
• The size and gravity of the item in question
When advocating fuller disclosure than is necessary a member should ensure their client is aware of the issues involved and their potential implications. Fuller disclosure should only be made with the client’s consent.
Additional disclosure should be considered where:
• There is inherent doubt to the treatment of an item
• HMRC has published its interpretation or has indicated its practice on a point but the client proposes a different view, whether or not supported by Counsel’s opinion. The member should refer to guidance on the Veltema Case.
21.8 Supporting Documents
HMRC does not consider it necessary for a taxpayer to provide supporting documentation to satisfy the taxpayer’s overriding need to make a correct filing. HMRC’s view is that, where it is necessary for that purpose, explanatory information should be entered in the white space provided on the filing.
21.9 Reliance on HMRC Published guidance
It is reasonable to rely on HMRC guidance in most cases, a member should be aware that the Tribunal and the courts will apply the law if this conflicts with HMRC guidance. If a client has relied on HMRC guidance which is clear and unequivocal and HMRC resiles from any of the terms of the guidance, a judicial review claim is possible.
21.10 Approval of tax filings
A member should advise the client to review their tax filing before it is submitted. A member should draw the client’s attention to any judgemental areas or positions reflected in the filing to ensure the client is aware of these and their implications before they approve the filing. A member should obtain evidence of the client’s approval of the filing.
21.11 Exceptions
The engagement should make it clear that filings are completed on the basis of the information provided by the client and the client is no less responsible for errors in the filing. A member may approve tax filings in their capacity as liquidator, receiver of administrator or under a personal appointment as a trustee, executor, attorney or director. If they approve a tax return on behalf of a client should consider:
• Their legal authority to do so
• The process whereby the client will review and take responsibility for the contents of the return
• Any legal implications of approving the return for both the practice and the individual signatory
21.12 referrals/ second opinions
Where a second opinion is sought, it should be from a suitably qualified and experienced professional who is subject to the requirements of the PCRT or equivalent.
A member may wish to put in arrangements with another firm or member of a professional body to be able to seek support when necessary and to ensure that there would be a minimum of disruption, in the event of incapacity or death of the sole practitioner.
21.15 Third party advice involving tax arrangements
If a member is submitting a tax filing on the clients behalf and is asked by the client to include items of tax planning based on third party advice, a member should consider if it complies with the members understanding of the law and is the person giving the advice appropriately qualified and a member of a PCRT body or equivalent regime. For complex planning a member should consider:
• Do the background facts agree with their understanding of the client
• Do legal opinions relate to the advice
• Is the advice current
• Does tax planning by a third party appear to involve contrived avoidance, if so is it a spotlighted scheme
• Will the scheme by caught by the GAAR or SGAAR
• Is the third-party advice significant, if so, should they get a second opinion instead of caveating their compliance responsibility
