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

Client Confidentiality and Disclosure for ACCA ATX Tax Advisers

Updated 11 October 2026 · Fact-checked

Confidentiality means you must not share client information without permission. You may or must disclose only where the client agrees, the law requires it (for example money laundering reporting to the NCA), or there is a legal or professional right or duty to speak. If a client will not correct an error, you cannot tell HMRC, but you must stop acting.

Understand Client Confidentiality and Disclosure

Confidentiality is one of the fundamental principles in the ACCA Code of Ethics and in Professional Conduct in Relation to Taxation (PCRT). You must not disclose professional information to anyone outside the firm without proper and specific authority. You must also not use it for your own benefit or for a third party's benefit.

The default is silence. Clients speak openly to advisers because they trust that their affairs stay private. If advisers could pass information to HMRC whenever they liked, clients would stop being honest and the system would work less well.

There are exceptions. Disclosure is allowed or required where: the client has given permission; the law requires it; or there is a professional right or duty to disclose that is not prohibited by law. Examples of the last group are responding to a quality review of the firm, complying with technical standards and ethics requirements, and defending yourself in legal or disciplinary proceedings. Where the client has authorised disclosure, think about the interests of all parties who could be affected.

The key legal duty in tax is anti-money laundering. Money laundering includes handling the proceeds of crime, and tax evasion is a crime. If you know or suspect that a client has benefited from criminal conduct, including deliberate under-declaration of tax, you must make a report to the firm's Money Laundering Reporting Officer (MLRO). The MLRO decides whether to make a Suspicious Activity Report to the National Crime Agency (NCA). This duty overrides confidentiality. Careless errors are different from deliberate evasion, but you should still consider the facts with care.

Tipping off is a separate offence. You must not tell the client that a report has been made or is being considered if that could prejudice an investigation. You also cannot tell HMRC about a client's error yourself. Your duty is to tell the client about the error and the consequences of not correcting it, and to ask them to disclose it. If they refuse, you must stop acting, consider whether a report is needed, and not disclose to HMRC without authority or legal requirement.

Key rules to remember

General rule
No disclosure without proper and specific authority, unless a legal or professional right or duty applies
Confidentiality also covers using information for personal gain or for third parties.
Permitted or required disclosure
Client permission OR legal requirement OR professional right or duty (not prohibited by law)
Always check which of the three applies. Name it in your answer.
Money laundering reporting route
Staff member → MLRO → NCA (Suspicious Activity Report)
Report internally to the MLRO. Do not report directly to HMRC.
Tipping off
Do not alert the client if it could prejudice an investigation
This is a criminal offence and a classic trap in scenarios.
Client will not correct an error
Advise client → ask them to disclose → if refused, cease to act → consider reporting
You cannot tell HMRC about the error without authority or a legal duty.

How to solve Client Confidentiality and Disclosure questions

Use this method for any scenario where you hold client information and someone wants it, or the client has done something wrong.

  1. 1Identify the information and who is asking for it, or what the client has done.
  2. 2State the default rule: confidentiality applies, and no disclosure without proper and specific authority.
  3. 3Test the exceptions: client consent, legal requirement, or professional right or duty.
  4. 4Decide whether the facts suggest deliberate evasion or only a careless error. Deliberate evasion or knowledge or suspicion of criminal proceeds triggers the money laundering duty.
  5. 5Apply the process: report to the MLRO if suspicion exists, avoid tipping off, and do not contact HMRC yourself without authority.
  6. 6If the client refuses to correct an error, advise them of the consequences, stop acting if they will not disclose, and follow the professional clearance steps for the successor.
  7. 7Write a clear recommendation tied to the scenario facts, with a short note on documentation and seeking advice.

Quickest way: Three-question check

When to use it: Use when time is short and the scenario is a short ethics part of a longer question.

  1. Is there authority to disclose? Consent, law, or professional duty.
  2. Is there suspicion of criminal conduct? If yes, MLRO report and no tipping off.
  3. Will the client not correct an error? Advise, then cease to act, and do not tell HMRC.

Common mistakes in Client Confidentiality and Disclosure

  • Saying you should tell HMRC about the client's error.

    Students link honesty with reporting to the authority.

    Fix: State that you need client permission or a legal duty. Otherwise you must ask the client to disclose, and cease to act if they refuse.

  • Reporting suspicion directly to the NCA or HMRC.

    Students forget the internal reporting structure.

    Fix: Report to the MLRO, who decides whether to submit a Suspicious Activity Report. A sole practitioner is their own MLRO.

  • Forgetting tipping off.

    Students focus on telling the client the right thing.

    Fix: Add that you must not warn the client about any report or investigation. Handle further client contact with care.

  • Treating every error as money laundering.

    Students read all non-compliance as criminal.

    Fix: Separate honest, careless mistakes from deliberate evasion. A genuine error still needs correcting but may not itself show criminal intent. Mention that the MLRO assesses the facts.

  • Ignoring client consent as a route.

    Students jump straight to legal duties.

    Fix: Always check whether the client can give permission, and whether others could be affected by the disclosure.

Worked examples

Example 1

You are a tax adviser. While preparing a client's self-assessment return you discover that the client omitted rental income in an earlier year, deliberately. The client refuses to tell HMRC. Explain your professional duties.

Show the solution
  1. Confidentiality is the default, so you cannot tell HMRC without authority.
  2. Tell the client about the omission and the consequences of not correcting it, including penalties and possible criminal liability, and ask them to disclose.
  3. The omission appears deliberate, so you suspect tax evasion. That means you suspect criminal proceeds. You must report internally to the MLRO.
  4. The MLRO decides whether to send a Suspicious Activity Report to the NCA. This duty overrides confidentiality.
  5. Do not tip off the client about the report if this could prejudice an investigation.
  6. Because the client refuses to correct the position, you should cease to act. You should not prepare the return on a basis that you know is incorrect.
  7. Document your advice and actions, and consider seeking independent legal or ethical advice.

Answer: You cannot tell HMRC on your own initiative, but you must advise the client to disclose, report your suspicion to the MLRO, avoid tipping off, and cease to act if the client refuses.

Example 2

A client asks you to provide their tax files to a prospective buyer of their business. The buyer is a friend of the client. Can you do this?

Show the solution
  1. Start with the default rule: you must not disclose without proper and specific authority.
  2. Client permission is a valid route. Ask for clear written consent that covers exactly which information is to be shared.
  3. Consider whether any third parties could be harmed. For example, the files may include information about other people or companies.
  4. Only disclose what is covered by the consent. Do not give extra information.
  5. Keep a record of the consent and what was disclosed.

Answer: Yes, but only with the client's clear, specific authority, limited to the information they approved, after considering the interests of anyone else affected.

Exam tips

  • Always name the three exceptions: consent, legal requirement, professional right or duty. It earns easy marks.
  • Mention the MLRO, the NCA and tipping off in any scenario with deliberate evasion.
  • Do not say you will tell HMRC about a client's error. Say you will advise the client and cease to act if they refuse.
  • Link every point to the scenario facts, and show professional scepticism and clear communication in the answer.
  • Keep a short, practical recommendation at the end, because professional skills marks reward clarity.

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

Client Confidentiality and Disclosure in other exams

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

Client Confidentiality and Disclosure: frequently asked questions

When can a tax adviser disclose client information?

You can disclose with the client's permission, where the law requires it, or where there is a professional right or duty to do so that the law does not prohibit. Outside those situations you must keep the information confidential.

Must a tax adviser report suspected tax evasion?

Yes. If you know or suspect that a client has benefited from criminal conduct, which includes deliberate tax evasion, you must report to your MLRO. The MLRO decides whether to send a report to the NCA.

What if a client refuses to disclose an error to HMRC?

You cannot report it to HMRC without authority or a legal duty. Explain the consequences to the client, ask them to disclose, and cease to act if they refuse. Also consider whether a money laundering report is needed.

What is tipping off?

Tipping off means alerting a client that a report has been made or an investigation is under way when this could prejudice that investigation. It is a criminal offence. Avoid any comment on a report to the client.