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

A tax adviser is offered a substantial commission by a software provider for recommending a particular tax-efficient investment product to clients. The product is suitable for some but not all clients. Which fundamental principle is primarily threatened, and what type of threat is it?

The principle primarily threatened is objectivity, and the threat is self-interest. The adviser has a financial incentive to recommend the product regardless of client suitability, which could bias judgement. Safeguards include disclosure to clients, independent review of the advice, or declining the commission.

  1. AConfidentiality, through a familiarity threat
  2. BProfessional competence, through an intimidation threat
  3. CIntegrity, through a self-review threat
  4. DObjectivity, through a self-interest threatCorrect

Explanation

A commission gives the adviser a financial interest in the recommendation, which is a self-interest threat to objectivity, as advice may be biased. It is not an intimidation, familiarity or self-review threat. Safeguards include disclosing the commission and declining it where it cannot be managed.

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