Advanced Taxation (UK) · Ethical and professional issues arising from the giving of tax planning advice

ACCA Code of Ethics and Fundamental Principles for Tax Advisers

Updated 11 October 2026 · Fact-checked

The ACCA Code of Ethics sets five fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. In ATX you identify which principle is under threat in the scenario, name the type of threat, and recommend a practical safeguard or, if needed, withdrawal from the engagement.

Understand ACCA Code of Ethics and Fundamental Principles

The Code of Ethics is the rulebook for how a professional accountant behaves. It applies to every ACCA member, including those who give tax advice. It does not tell you what the tax rules are. It tells you how to behave when you apply them.

The code rests on five fundamental principles. Integrity means being straightforward and honest. Objectivity means not letting bias, conflict of interest or the influence of others override your judgement. Professional competence and due care means keeping your knowledge up to date and acting diligently, and not taking on work you cannot do properly. Confidentiality means not disclosing client information without proper authority or a legal or professional right or duty to do so. Professional behaviour means complying with the law and avoiding conduct that would discredit the profession.

The code uses a threats and safeguards approach. A threat is anything that might stop you complying with a principle. The usual categories are self-interest, self-review, advocacy, familiarity and intimidation. You identify the threat, evaluate how significant it is, and then address it. You can address a threat by eliminating the circumstances that create it, by applying safeguards that remove it or cut it to an acceptable level, or by declining or ending the engagement if neither of those works.

For tax advisers, the code is applied through Professional Conduct in Relation to Taxation (PCRT). PCRT is a set of standards that the main UK accountancy bodies have agreed. It builds on the fundamental principles and adds tax-specific guidance. Key points: you act in your client's best interests but within the law, you must not assist in tax evasion, and planning must be based on a genuine interpretation of the law. You should also be clear to clients about the risks of aggressive arrangements. Remember that the client is responsible for the content of their tax return, but you must still take reasonable care, must not knowingly submit an incorrect return, and must not assist in evasion.

In ATX, Section A carries 5 ethics marks, within its split of 35 technical, 5 ethics and 10 professional skills marks. Ethical and professional issues can also be examined in Section B questions. You will be given a scenario, such as a client who wants to hide income or a firm with a conflict of interest. You then explain the issue and say what you should do.

Key rules to remember

Five fundamental principles: Integrity | Objectivity | Professional competence and due care | Confidentiality | Professional behaviour; Learn them as a list. Always name the principle that is affected in your answer.
Five categories of threat: Self-interest | Self-review | Advocacy | Familiarity | Intimidation; Pick the one that fits the scenario and say why. Do not list all five without applying them.
Threats and safeguards approach: Identify threat → Evaluate significance → Address it: eliminate the circumstances, apply safeguards, or decline or end the engagement; Use this as the structure of every ethics answer. Safeguards are only one way to address a threat.
Evasion versus avoidance: Evasion = illegal, deliberate non-disclosure or misstatement | Avoidance = legal use of the rules to reduce tax; You can advise on avoidance within the law. You must never assist with evasion.

How to solve ACCA Code of Ethics and Fundamental Principles questions

Use this method for any ethics requirement in ATX. Keep the answer tied to the facts you are given.

1Read the requirement and note how many marks it carries. This tells you how many points to make.
2Identify the facts that raise an ethical concern, such as a conflict, an error, a request to hide something or a fee issue.
3Name the fundamental principle or principles at risk and explain in one sentence why the facts threaten it.
4State the type of threat (self-interest, self-review, advocacy, familiarity or intimidation) where relevant.
5Recommend specific safeguards, such as disclosure, separate teams, a second partner review, or obtaining written client consent.
6Say what to do if the issue cannot be resolved, such as ceasing to act, and consider confidentiality and any reporting duty.
7Finish with a clear recommendation. Do not just describe the problem.

Quickest way: Principle, threat, action in three lines

When to use it: Use this when time is short or the ethics question carries only a few marks.

Line 1: name the principle at risk and why, using a fact from the scenario.
Line 2: name the threat type.
Line 3: give the action to take, and the fallback of withdrawing if the client will not cooperate.
Add one extra point on confidentiality or communication with the client if marks remain.

Common mistakes in ACCA Code of Ethics and Fundamental Principles

Listing the five principles with textbook definitions and no application.
Students recall the list and feel safe writing it out.
Fix: Spend your words on the scenario. Name the principle in a short phrase, then link it directly to the facts.
Saying you must always report a client to HMRC.
Students confuse the duty to advise the client with a duty to report.
Fix: Confidentiality is the starting point. You must urge the client to correct the error, and if they refuse you should consider ceasing to act. Confidentiality may be overridden only where there is a legal duty (such as money laundering reporting), a legal or professional right or duty to disclose, or authority from the client. The exception most likely to be tested is money laundering. If you know or suspect that someone is dealing with criminal property, for example because tax has been evaded and the unpaid tax is criminal property, you report internally to the money laundering reporting officer (MLRO). The MLRO decides whether to make a report to the National Crime Agency (NCA), not to HMRC. The client's consent is not needed for this report, and you must not tip off the client. If the firm wants to carry on acting after a report, the MLRO may need to seek NCA consent (a defence against money laundering) first. Ceasing to act must also be handled so that it does not tip off the client.
Treating tax avoidance and tax evasion as the same thing.
Both reduce tax, and the words sound similar.
Fix: Avoidance is legal use of the rules. Evasion is illegal. Explain this difference when a scenario mixes the two.
Giving a threat but no safeguard.
Students stop once they have spotted the problem.
Fix: Always add at least one practical safeguard and a final fallback if it fails.
Suggesting the adviser should just do what the client says.
Students focus on client service and forget professional duties.
Fix: You act in the client's interest within the law. You must not mislead HMRC or take part in anything you believe to be evasion.
Ignoring the professional skills marks on ethics answers.
Students write notes instead of reasoned, clear advice.
Fix: Use short, well-structured points, give a clear recommendation, and write in a professional tone suited to the reader.

Worked examples

Example 1

This is an ethics requirement within a Section A case study, where Section A carries 5 ethics marks. You are a tax manager at a firm. A long-standing client, Mr Rao, tells you that he received £12,000 of rental income last year that he did not include in his tax return. He asks you to say nothing and to file this year's return as usual. Explain the ethical issues and what you should do.

Show the solution

Principles at risk: integrity and professional behaviour, because filing a return you know to be incomplete would be dishonest and break the law. Confidentiality is also relevant, but it does not stop you making a legally required report.
Threat: intimidation or self-interest, since the client is a long-standing fee source and may pressure you to stay quiet.
First action: explain to Mr Rao that he has an error in a past return and that it should be corrected by telling HMRC. Explain the consequences of not doing so, including interest and penalties that may be higher if HMRC finds it first.
Second action: you cannot act on a return you know to be wrong. If he refuses to disclose, you should consider ceasing to act. Take the MLRO's advice on how and when to do so, so that withdrawing does not tip him off.
Money laundering: Mr Rao has knowingly left out the income, so the facts give you knowledge or suspicion of money laundering, because the unpaid tax is criminal property. You must make an internal report to the firm's MLRO. The MLRO, not you, decides whether to submit a suspicious activity report (SAR) to the National Crime Agency. This legal duty overrides client confidentiality and does not need Mr Rao's consent. The MLRO may also need to seek NCA consent (a defence against money laundering) before the firm continues to act.
Tipping off: do not tell Mr Rao that a report has been or will be made, and do not say anything that could prejudice an investigation. Urging him to disclose to HMRC is fine. Keep records of your advice.

Answer: The omission engages integrity and professional behaviour. Urge Mr Rao to disclose to HMRC and do not file a return you know is incorrect. Because the facts give you knowledge or suspicion of money laundering, you must report internally to the money laundering reporting officer, who decides whether to make a SAR to the NCA and may need to seek NCA consent before the firm continues to act. This legal duty overrides confidentiality. Avoid tipping off Mr Rao, including in how the firm ceases to act if he refuses to correct the error.

Example 2

This is an ethics requirement within a Section A case study, where Section A carries 5 ethics marks. Your firm prepares the tax return of Dara Ltd and also acts for its main shareholder. The firm has now been asked to advise Ela Ltd on acquiring the shareholder's shares in Dara Ltd. Identify the ethical threats and safeguards.

Show the solution

Principles at risk: objectivity and confidentiality. The firm would advise one party to the deal while holding confidential information about the other, and its interests in the two engagements conflict.
Nature of the issue: this is a conflict of interest. It is not a sixth category of threat. It usually gives rise to self-interest or advocacy threats, because the firm cannot argue fully for both sides and may want to protect fees from both clients.
Safeguard 1: tell all the clients concerned about the conflict and get their written consent before the firm acts.
Safeguard 2: use separate teams with information barriers so that confidential information does not pass between them.
Safeguard 3: have an independent partner review the advice.
Fallback: if a safeguard cannot be applied, or any client objects, decline the new engagement or withdraw from one or more of the engagements.

Answer: The firm faces a conflict of interest that threatens objectivity and confidentiality, usually through self-interest or advocacy threats. It should disclose the conflict, obtain consent, use separate teams and information barriers, and have an independent review. If this does not reduce the threat to an acceptable level, the firm should decline the Ela Ltd engagement or withdraw from one or more engagements.

Exam tips

Ethics in ATX Section A carries 5 marks and is short and predictable. Practise a three-part answer: principle, threat, action. Be ready for ethical issues in Section B questions too.
Always tie each point to a fact in the scenario. General statements of the code earn little.
If the client refuses to correct an error, the answer is to cease to act, not to ignore it. Mention confidentiality and the money laundering angle where unpaid tax is involved.
Keep professional skills in mind. Give a clear recommendation in a calm professional tone and do not waffle.
Distinguish avoidance from evasion in any planning scenario. Show that you will advise on lawful planning but not on concealment.

Practice questions from Ethical and professional issues arising from the giving of tax planning advice

ACCA Code of Ethics and Fundamental Principles in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Code of Ethics and Fundamental Principles: frequently asked questions

What are the fundamental principles in the ACCA Code of Ethics?

There are five: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. Every ethics answer in ATX should name the principle that is at risk and link it to the scenario.

What is PCRT and why does it matter for ATX?

PCRT stands for Professional Conduct in Relation to Taxation. It is the set of standards that applies the fundamental principles to tax work. It matters because ATX scenarios often ask what a tax adviser should do when a client wants aggressive planning or has made an error.

How do I answer an ethics question in ACCA Advanced Taxation?

Identify the facts that raise a concern, name the principle and the type of threat, and then recommend how to address it. That may be by eliminating the circumstances, applying safeguards, or declining or ending the engagement. Always finish with a clear recommendation.

Can I tell HMRC about a client's error without their permission?

Not normally. Confidentiality applies unless the client agrees or the law requires or allows disclosure. You should urge the client to correct the error, and if they refuse, consider ceasing to act. If you know or suspect that a client is dealing with criminal property, such as unpaid tax from evasion, the duty to report money laundering overrides confidentiality. You report to the firm's MLRO, who decides on a report to the NCA, not to HMRC, and who may need to seek NCA consent before the firm continues to act. Do not tip off the client, including when you cease to act.