Chapter 23

Question 1

What is meant by the term ‘error’?

Answer 1

Intended to include all errors and mistakes whether the were made by the client

Question 2

What should a member do when dealing with errors?

Answer 2

• Give client appropriate advice
• Seek to persuade the client to behave correctly
• Take care not so be seen assisting in criminal behaviour
• When in doubt - discuss with colleague or independent
• A member must bear in mind the legislation on ML

Question 3

Is the member free to continue to act for a client if there is an error?

Answer 3

Yes - if the client provides and explanation for the error to the satisfaction of the member

Question 4

What should a member do when a client fails to explain an apparent error?

Answer 4

Member should consider whether is it appropriate to continue to act

Question 5

What should a member do if they are unsure whether there is an error?

Answer 5

Should seek specialist advice

Question 6

What is classed as a minimal error?

Answer 6

Less than £200

Question 7

Can a member always disclose an error to HMRC?

Answer 7

Only if they have authority to disclose

Question 8

What’re the 3 stages to follow when disclosing to HMRC?

Answer 8

1: Asking the client for authority to disclose - encourage a timely disclosure
2: Advise the client of the consequences of failure of disclosure - are consequences
3: Advise the client in writing of the consequences of failure to disclose - essential in writing

Question 9

What actions should be taken when client refuses to disclose?

Answer 9

Member must:
• Cease to act
• If relevant - inform HMRC of their withdrawal
• Consider withdrawing reports signed by the member
• Consider ML regs
• Consider their response to any professional enquiry letters

Question 10

Who should you notify when cease to act for client?

Answer 10

HMRC - whether disclose further info depends on what’s included in engagement letter

Question 11

A client should notify HMRC of possible deficiency in their return unless what?

Answer 11

• The basis upon which the self-assessment was made what sufficiently clear in original return
• There is continuity of treatment of the item from the previous return
• The item was treating in accordance with ‘prevailing practice’

Question 12

What does Help sheet C provide?

Answer 12

It provides guidance on the application of the PCRT fundamental principles and standards for tax planning with dealing with errors that arise in tax