ACCA Strategic Professional · Advanced Taxation (UK) · Appropriateness of planning measures to a taxpayer's circumstances and objectives
A client asks the tax adviser to help set up an arrangement whose only purpose is to create an artificial loss, and the adviser believes it is contrary to the intention of Parliament. Which course of action is most appropriate for the adviser under professional ethics for tax planning?
The adviser should decline to promote the scheme and explain to the client that it is an artificial arrangement against the intention of Parliament, carries a high risk of HMRC challenge and penalties, and is not acceptable planning. A disclaimer or non-disclosure does not solve the problem.
- ADecline to advise on the scheme, explaining the risks of challenge by HMRC and that it is not acceptable planningCorrect
- BImplement the scheme provided the client signs a disclaimer accepting all liabilities
- CImplement the scheme but not disclose it on the client's return to reduce the chance of enquiry
- DImplement the scheme because any arrangement that is legal on its face is acceptable planning
Explanation
Artificial arrangements contrary to the intention of Parliament are not acceptable planning, and the adviser should not promote them. A disclaimer does not cure the ethical problem, and non-disclosure on the return risks evasion and penalties.
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