TC Ethics

Question 1

Threats to principles

Answer 1

Self interest - professional competence

Self review - integrity

Familiarity - confidentiality

Intimidation - Objectivity

Advocacy- professional behaviour

Question 2

Conflict of interest

Answer 2

Notify all relevant parties

Obtain consent from relevant parties

Use separate engagement teams

Secure data filing

Confidentiality agreements signed by staff

Must not work on clients during and immediately after secondment to HMRC

Question 3

Client procedures

Answer 3

Ensure relevant skills to undertake work

Client due diligence (CDD) based on risk

• Engagement letter sets out scope of client /advisors responsibilities :
• client responsible for their tax; advisor calculates based on information provided
• should include authority to disclose HMRC errors

Question 4

Errors

Answer 4

Check engagement letter to see if authority to disclose to HMRC

Ask client permission to disclose if no authority in engagement letter

Advise client of potential penalties, interest and criminal proceedings

If permission refused: cease to act and notify HMRC that no longer acting for client

Consider if report should be made to MLRO

Question 5

Money laundering

Answer 5

Tax evasion is a criminal offence so the proceeds are from a crime

Advisor must report to MLRO if reasonable grounds for suspicion

MLRO decides whether a report should be made to NCA

Disclose confidential information without client consent

Question 6

Defences for failing to report

Answer 6

No suspicion

Threat to safety

Offences occurred outside of UK

Privileged reporting exemption when giving legal advice

Question 7

Procedures for money laundering

Answer 7

Register with ICAEW

Appoint MLRO

Train staff

Internal procedures

CDD

Question 8

Professional indemnity insurance

Answer 8

Gross fee income < £600,000 : P11 is 2.5 times income (£100k minimum)

Gross fee income > P11 is £1.5m minimum

Maintain for 2 years after retirement

Question 9

Data protection

Answer 9

GDPR for personal data

Data security : passwords changed every three months, suspicious activity reported

Data protection officer (DPO) should be appointed

Breaches should be notified to the DPO

DPO should notify ICO within 72 hours

Affected individuals should be notified of the breach

Question 10

Professional conduct in relation to taxation

Answer 10

Client specific - tailored to specific facts, not mass marketed schemes

Lawful- highlight areas where law is uncertain

Disclosure and transparency-HMRC must have relevant facts

Tax planning arrangements- must not be :

• Contrary to what parliament intended
• highly artificial or contrived

Profesional judgement and appropriate documentation

Question 11

Planning avoidance evasion

Answer 11

Planning :

• Legal
• Using reliefs as intended
• uncontroversial
• eg pension contributions, ISA, BADR claim

Avoidance

• legal
• taking advantage of unintended loopholes
• often challenged by HMRC in courts
• uses artificial transactions

Evasion

• Illegal
• Misleading HMRC
• Criminal finances act offences for businesses failing to prevent tax evasion
• Understating income/gains
• overstating expenses/losses
• not filing returns