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

Professional Conduct in Relation to Taxation (PCRT) for ACCA ATX

Updated 11 October 2026 · Fact-checked

PCRT is a set of standards, issued by professional bodies including ACCA, that tax advisers in the UK must follow. It covers integrity, confidentiality, client relationships, tax planning and dealing with HMRC. In ATX, you apply it to a scenario: spot the issue, state the standard, and recommend a clear action.

Understand Professional Conduct in Relation to Taxation (PCRT)

Professional Conduct in Relation to Taxation (PCRT) is guidance on how a tax adviser should behave. It sits on top of the ACCA Code of Ethics and its fundamental principles: integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. PCRT applies those principles to tax work specifically.

The guidance covers four broad areas. First, the client relationship: you act in the client's best interests, but within the law and without misleading HMRC. Second, tax planning: what advice is acceptable and how it must be given. Third, dealing with HMRC: you must be honest, and you must not mislead by statements or omissions. Fourth, errors and disclosure: what to do when something has gone wrong.

On tax planning, the key idea is that you may advise on legitimate planning that follows the intention of Parliament. You must not assist in tax evasion, and you must not promote or advise on arrangements you know are artificial and abusive. When you advise, you should make sure the client understands the facts and assumptions you relied on, the risks and the possible consequences, including penalties and interest. Advice should be clear about what is fact, what is opinion and what is assumed.

On disclosure and client information, you owe a duty of confidentiality. You may disclose only with the client's permission, or where the law requires or permits it, for example money laundering reporting. If a client refuses to correct a known error, you should explain the consequences, and you may have to stop acting. You should not assume you can tell HMRC without the client's consent unless a legal duty applies.

In the ATX exam, PCRT is mainly tested in the ethics requirement of Section A and in short Section B parts. You need to identify the issue, apply the right principle, and give practical advice. Marks also reward professional skills: clear, well-reasoned and sceptical answers.

Key rules to remember

Fundamental principles: Integrity | Objectivity | Professional competence and due care | Confidentiality | Professional behaviour; Name the principle that is threatened, then link it to the facts.
Acceptable tax planning: Lawful + follows the intention of Parliament + client informed of risks = acceptable planning; Artificial, abusive or concealed arrangements fall outside this.
Tax evasion: Deliberate dishonest non-disclosure or misstatement to HMRC = illegal; You must not assist. Avoidance is lawful but may be challenged; evasion is criminal.
Disclosure rule: Confidentiality applies unless: client consent, legal duty, or professional right or duty to disclose; Do not state that you may report simply because you disagree with the client.
Error response: Tell client → advise to disclose to HMRC → if refused, consider ceasing to act; Do not continue as if nothing has happened.

How to solve Professional Conduct in Relation to Taxation (PCRT) questions

Use the same sequence for any PCRT or tax ethics requirement. It keeps your answer structured and earns professional skills marks.

1Read the requirement and note whether it asks you to identify issues, explain the standard, or recommend action.
2Pick out the facts that matter: what the client wants, what has gone wrong, and who is affected.
3Name the ethical or PCRT issue, such as tax evasion, an error in a return, a conflict of interest, or confidentiality.
4State the relevant principle or standard in one sentence, using plain wording.
5Apply it to the facts. Say why the conduct is or is not acceptable and what the risks are for the client and for you.
6Recommend specific actions, such as advising the client in writing, correcting the error with HMRC, or ceasing to act.
7Add practical points: record the advice, tell the client the consequences, and consider money laundering reporting if relevant.
8Finish with a short conclusion that answers the requirement directly.

Quickest way: Issue, principle, action

When to use it: Use this when you have limited time on a short ethics requirement or the last part of a Section A question.

Write the issue in one line.
Write the principle or PCRT standard in one line.
Apply it to the scenario in two or three lines.
List two or three actions in order of priority.
Add one line on the risk if the client refuses.

Common mistakes in Professional Conduct in Relation to Taxation (PCRT)

Treating all tax planning as unethical
Students link ethics questions with wrongdoing and become over-cautious.
Fix: Say that lawful planning within the intention of Parliament is acceptable. Only evasion and abusive arrangements are not.
Confusing tax avoidance with tax evasion
Both words sound similar and the boundary is often blurred in the news.
Fix: Define each in one line: evasion is illegal and dishonest; avoidance is lawful use of the rules, though it can be challenged.
Saying the adviser should report the client straight to HMRC
Students assume honesty to HMRC overrides confidentiality.
Fix: State that you need the client's permission or a legal duty. First advise the client to disclose, and consider ceasing to act if they refuse.
Listing principles without applying them
Students memorise the five fundamental principles and recite them.
Fix: Choose only the principles that are threatened and tie each to a specific fact in the scenario.
Forgetting practical actions
Students stop at explaining the issue.
Fix: Always end with what you will do: advise in writing, record the discussion, correct the error, or withdraw.
Ignoring the client's understanding of risk
Students focus on the tax saving, not on the advice process.
Fix: Mention that the client must be told the assumptions, risks, penalties and interest of the planning.

Worked examples

Example 1

You are a tax adviser. Your client, Mr Rao, tells you he has not declared £8,000 of rental income on his last two tax returns. He says he wants you to prepare this year's return without mentioning it. Advise on your professional position.

Show the solution

Issue: the client has under-declared income, which is an error, and he now wants the omission to continue, which would be deliberate.
Standard: you must not mislead HMRC, and you must not assist in tax evasion. Integrity and professional behaviour are threatened.
Application: the past returns contain an error. Preparing this year's return without the income would knowingly mislead HMRC.
Confidentiality: you cannot report him to HMRC without his consent unless a legal duty applies, but you also cannot act as if nothing has happened.
Action 1: explain to Mr Rao the consequences, including tax, interest and penalties, and that voluntary disclosure normally leads to lower penalties.
Action 2: advise him to disclose to HMRC and include the income this year.
Action 3: if he refuses, you should cease to act and consider whether you have a money laundering reporting duty.
Record your advice in writing.

Answer: You must not prepare the return omitting the income. Advise Mr Rao to correct the past returns and include the income now. If he refuses, stop acting and consider your anti-money laundering reporting duties, without tipping him off.

Example 2

A new client asks you to advise on an arrangement that a promoter says will reduce his tax to nil. It uses a series of circular transactions with no commercial purpose. Explain how PCRT applies to your advice.

Show the solution

Issue: the arrangement looks artificial and designed solely for a tax advantage.
Standard: advisers may give lawful planning advice, but should not promote or advise on arrangements they know are abusive or that go against the intention of Parliament.
Competence and due care: you must assess the scheme properly, not rely on the promoter's claims.
Risk: the arrangement may be challenged by HMRC, possibly under the general anti-abuse rule, with tax, interest and penalties.
Disclosure: check whether the scheme is notifiable under the disclosure rules.
Action: tell the client in writing the risks and your concerns, state your assumptions, and recommend a commercially based alternative.
If the client insists on an arrangement you consider abusive, consider declining to act.

Answer: You should not recommend the scheme. Explain the risks, including HMRC challenge and penalties, check disclosure obligations, and suggest commercially driven planning instead. Decline the work if the client insists on the artificial scheme.

Exam tips

Link every principle you name to a specific fact in the scenario. A bare list earns little.
Always give clear actions: advise, record, disclose, or cease to act. Examiners reward practical advice.
Be precise on confidentiality. Say you need client consent or a legal duty before disclosing.
Show professional scepticism by questioning the client's explanation and the promoter's claims.
Keep ethics answers short and structured. Use short headed paragraphs or bullets to earn professional skills marks.

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

Professional Conduct in Relation to Taxation (PCRT): frequently asked questions

What is PCRT in ACCA ATX?

PCRT stands for Professional Conduct in Relation to Taxation. It is guidance for tax advisers on how to apply fundamental ethical principles to tax work. ATX tests it through scenarios where you must identify the issue and give advice.

Can a tax adviser report a client's error directly to HMRC?

Not normally without the client's permission, because of the duty of confidentiality. Unless a legal duty applies, you advise the client to disclose. If they refuse, you consider ceasing to act.

Is tax planning acceptable under PCRT?

Yes, lawful planning that follows the intention of Parliament is acceptable. You must explain risks and assumptions to the client. You should not advise on tax evasion or on arrangements you know are abusive.

How is PCRT examined in ATX?

It usually appears in the ethics requirement of Section A and sometimes in Section B. You are asked to identify ethical issues, explain relevant standards and recommend actions. Professional skills marks reward clear and reasoned answers.