ACCA Strategic Professional · Advanced Taxation (UK) · Ethical and professional issues arising from the giving of tax planning advice
A firm acts for both Mr Osei and his business partner, Mr Lund, in advising on the tax consequences of a dissolution of their partnership. The interests of the two are in conflict over the allocation of the partnership's capital gain. Which course of action best complies with the ACCA Code of Ethics?
The firm should disclose the conflict to both clients and continue only if safeguards such as separate teams and informed consent reduce the threat to an acceptable level. Otherwise it should withdraw, because the conflict threatens objectivity and confidentiality.
- AAct for both without any further action since both are existing clients
- BAct for Mr Osei only, because he has been a client longer, without telling Mr Lund
- CDisclose the conflict to both clients and act for both only if safeguards, such as separate teams and informed consent, reduce the threat to an acceptable levelCorrect
- DAct for both and share all information freely between them to avoid disputes
Explanation
A conflict of interest threatens objectivity. The firm must identify it, disclose it, and apply safeguards such as separate teams, information barriers and consent, or decline if the threat cannot be reduced to an acceptable level. Sharing information freely would breach confidentiality, and acting silently for one party breaches transparency.
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