Course Notes Flashcards
What are the 5 PCRT standards for tax planning?
Client specific
Lawful
Disclosure & Transparency
Advising on tax planning arrangements
Professional judgement & appropriate documentation
Are the PCRT standards instead of the fundamental principles?
No they are supplementary
What are the 6 things to consider with conflict resolution?
Relevant facts
Relevant parties
Ethical issues involved
Fundamental principles related to the matter in question
Established internal procedures
Alternative courses of action
3 steps when accepting a new client
Confirmation of the clients identity
Consideration of threats to the fundamental principles
Issuance of an engagement letter
What is the minimum about of indemnity insurance required byICAEW?
Gross fee income less than 600k = 2.5 x gross fee income (minimum 100k)
Gross fee income more than 600k = minimum 1.5million
5 ways must comply with GDPR
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
What precautions can be taken to prevent unauthorised access to client data?
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
How long do breaches of GDPR have to be reported? What are the related fees?
72 hours and tiered fines up to 4% of annual global turnover (or 20mil euro if higher)
If the client provides incorrect or misleading data leading to an underpayment of tax what steps should be taken?
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
Can a firm be done for confidentiality breach if they report through an SAR to NCA?
Yes if there is not reasonable grounds for suspicion
What are the penalties for money laundering?
14 years main offence
5 years failure to disclose
2 years for tipping off
What are the different levels of the Economic Crime Levy?
Small = Exempt
Medium = £10k
Large = £36k
Very large = £250k
Define tax planning
Legal tax reduction based on the intended consequence of legislation
Examples of tax planning
Making pension contributions
ISAs
Define tax avoidance
Legal tax reduction involving bending the rules and obtaining a tax advantage not intended by Parliament
Examples of tax avoidance
Loss schemes
Use of circular transactions
Examples of tax avoidance
Certain loss schemes
Use of circular transactions
Define tax evasion
Illegal reduction of tax by seeking to mislead HMRC
Punishable by penalties
Falls within money laundering
Examples of tax evasion
Failure to notify HMRC
Understating income
What is GAAR?
General Anti-Abuse Rule
HMRC have several signposts to flag abusive avoidance: (6)
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
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:
(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
