Tax advisory firms should be following the principles and standards for tax planning set out in Professional Conduct in Relation to Taxation (PCRT).
PCRT has been prepared by seven professional bodies (the Association of Accounting Technicians (AAT), the Association of Chartered Certified Accountants (ACCA), the Association of Taxation Technicians (ATT), Chartered Institute of Taxation (CIT), the Institute of Chartered Accountants of Scotland (ICAS), the Institute of Chartered Accountants in England and Wales (ICAEW) and the Society of Trust and Estate Practitioners (STEP)) whose members work in tax. Additionally, it has been endorsed by HMRC as an acceptable basis for dealings between members of professional bodies and HMRC. PCRT has been in existence for over 20 years and is regularly updated.
Professional bodies require that members be familiar with and comply with PCRT or risk disciplinary action.
Fundamental Principles of PCRT
There are five fundamental principles underlying PCRT:
- Integrity – To be straightforward and honest in all professional and business relationships;
- Objectivity – To not allow bias, conflict of interest or undue influence of others to override professional or business judgements;
- Professional competence and due care – To maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards;
- Confidentiality – To respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not disclose any such information to third parties without proper and specific authority, unless there is a legal or professional right or duty to disclose, nor use the information for the personal advantage of the member or third parties; and
- Professional behaviour – To comply with relevant laws and regulations and avoid any action that discredits the profession.
Standards for Tax Planning
The standards for tax planning build on the fundamental principles. Tax planning must be:
- Client-specific – Tax planning must be specific to the particular client’s facts and circumstances. Clients must be alerted to the wider risks and the implications of any courses of action;
- Lawful – At all times members must act lawfully and with integrity and expect the same from their clients;
- Disclosure and transparency – Disclosure should be made whenever required by law and fuller disclosure must be recommended to clients wherever it is appropriate given a wider relationship or dialogue with the relevant revenue authority that is relevant to that client;
- Tax planning arrangements – Members should document the detailed reasoning and evidence sufficiently to be able to demonstrate why they took the view that any planning was not in breach of this Standard; and
- Professional judgement and appropriate documentation – Members should be prepared to identify, support and where appropriate defend the judgements they made in applying these requirements to their work.
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