Course Notes Flashcards

1
Q

What are the 5 PCRT standards for tax planning?

A

Client specific
Lawful
Disclosure & Transparency
Advising on tax planning arrangements
Professional judgement & appropriate documentation

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2
Q

Are the PCRT standards instead of the fundamental principles?

A

No they are supplementary

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3
Q

What are the 6 things to consider with conflict resolution?

A

Relevant facts
Relevant parties
Ethical issues involved
Fundamental principles related to the matter in question
Established internal procedures
Alternative courses of action

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4
Q

3 steps when accepting a new client

A

Confirmation of the clients identity
Consideration of threats to the fundamental principles
Issuance of an engagement letter

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5
Q

What is the minimum about of indemnity insurance required byICAEW?

A

Gross fee income less than 600k = 2.5 x gross fee income (minimum 100k)

Gross fee income more than 600k = minimum 1.5million

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6
Q

5 ways must comply with GDPR

A

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

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7
Q

What precautions can be taken to prevent unauthorised access to client data?

A

Passwords kept safe from unauthorised use
IT equip kept physically secure
Unusual activity on HMRC online account reported immediately
Awareness of how to deal with phishing emails

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8
Q

How long do breaches of GDPR have to be reported? What are the related fees?

A

72 hours and tiered fines up to 4% of annual global turnover (or 20mil euro if higher)

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9
Q

If the client provides incorrect or misleading data leading to an underpayment of tax what steps should be taken?

A

Advise the client to inform HMRC or request consent to do so on their behalf
Explain the consequences of a failure to disclose
If the client refuses to co-operate, resign from your position as their adviser and inform HMRC that you have resigned. Do not tell HMRC the reason.
Consider the need to submit a suspicious activity report to NCA

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10
Q

Can a firm be done for confidentiality breach if they report through an SAR to NCA?

A

Yes if there is not reasonable grounds for suspicion

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11
Q

What are the penalties for money laundering?

A

14 years main offence
5 years failure to disclose
2 years for tipping off

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12
Q

What are the different levels of the Economic Crime Levy?

A

Small = Exempt
Medium = £10k
Large = £36k
Very large = £250k

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13
Q

Define tax planning

A

Legal tax reduction based on the intended consequence of legislation

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14
Q

Examples of tax planning

A

Making pension contributions
ISAs

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15
Q

Define tax avoidance

A

Legal tax reduction involving bending the rules and obtaining a tax advantage not intended by Parliament

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16
Q

Examples of tax avoidance

A

Loss schemes
Use of circular transactions

17
Q

Examples of tax avoidance

A

Certain loss schemes
Use of circular transactions

18
Q

Define tax evasion

A

Illegal reduction of tax by seeking to mislead HMRC

Punishable by penalties
Falls within money laundering

19
Q

Examples of tax evasion

A

Failure to notify HMRC
Understating income

20
Q

What is GAAR?

A

General Anti-Abuse Rule

21
Q

HMRC have several signposts to flag abusive avoidance: (6)

A

 It sounds too good to be true
 Tax results are out of proportion with the commercial or economic risk or activity
 Artificial or contrived arrangements, or circular money flow
 Offshore entities or tax haven countries are involved for no good reason
 Secrecy or confidentiality agreements exist
 The arrangement has a scheme registration number assigned by HMRC

22
Q

Businesses are required to put prevention procedures in place to mitigate the risk of tax evasion facilitated by an employee / associate of the business. These include:

A

(1) Undertaking a risk assessment to identify the risks of facilitation of tax evasion and the potential gaps in the existing control environment;
(2) Introducing any changes necessary to ensure robust procedures are in place preventing employees and associates from engaging in or facilitating tax evasion;
(3) Securing top level commitment from the company’s board and/ or senior executives about the risks of exposure to the offences and the need for the business to respond to the offences;
(4) Performing due diligence;
(5) Communicating the offences, including training on tax evasion and the offences; and
(6) Monitoring and reviewing the procedures

23
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23
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