Following consultations within the seven professional bodies for accountants and tax advisers, the Treasury has given final approval to the revised Professional Conduct in Relation to Taxation (PCRT).
The updated guidance, which comes into force from March 2017, details the standards expected of tax advisers and agents with regards to tax planning.
The PCRT has been endorsed by HMRC and sets out clear professional standards in relation to the facilitation and promotion of tax avoidance.
The approved PCRT must be adhered to by all members of the seven institutes who have signed up to the code, but does not cover non-members nor does it have a statutory basis.
If a member of any of the seven institutes contravenes the standards they will face disciplinary action which could also include public censure.
The seven professional bodies signed up to the PCRT are:
- Chartered Institute of Taxation (CIOT);
- Association of Taxation Technicians (ATT);
- Association of Accounting Technicians (AAT);
- Association of Chartered Certified Accountants (ACCA);
- Institute of Chartered Accountants in England and Wales (ICAEW);
- Institute of Chartered Accountants of Scotland (ICAS); and
- Society of Trust and Estate Practitioners (STEP).
The most significant change being made to PCRT is the addition of a set of Standards for Tax Planning.
Of these new Standards, the most significant development relates to the expected standards of behaviour when advising on tax planning arrangements – this is to avoid any action that discredits the profession. There is a robust focus on potential abuse of tax planning and this has been added to the existing five fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
There are an additional five new standards for tax planning that members must observe. These are described as a requirement, not guidance.
As part of the tougher tax planning code, there is a standard which makes clear that members ‘must not create, encourage or promote tax planning arrangements or structures that
- set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation, and/or
- are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation.
We suspect that there would be fewer ambiguities if the legislation was drafted to reflect ‘the clear intention of Parliament’ rather than professional advisers being left to interpret what was intended.
In a joint statement, the seven tax and accounting institutes said: ‘We believe these new Standards for Tax Planning achieve an appropriate balance – making clear to the small minority of tax professionals who continue to facilitate and promote tax avoidance schemes that this behaviour is not acceptable, whilst enabling the majority of advisers to continue undertaking responsible tax planning for their clients to help ensure that they pay the right amount of tax as intended by law.
You can view here the revised Professional Conduct in Relation to Taxation (PCRT) effective 1 March 2017
