ACCA Strategic Professional · Advanced Taxation (UK) · Ethical and professional issues arising from the giving of tax planning advice
Fenwick LLP, a tax adviser, discovers that a client, Mr Dalton, submitted a self-assessment return that understated his taxable income because of an innocent error by the firm. Which action is consistent with the professional conduct in relation to taxation (PCRT) standards?
The adviser should promptly tell the client about the error, explain how to correct it and the consequences of not doing so, and seek authority to disclose to HMRC. Acting secretly breaches confidentiality, and silence or delay breaches professional standards.
- ATell Mr Dalton promptly about the error and the need to correct it with HMRC, and ask him to authorise disclosureCorrect
- BSay nothing, as the error was innocent and HMRC has not queried the return
- CCorrect the return directly with HMRC without informing Mr Dalton
- DWait until the enquiry window closes before raising the matter with the client
Explanation
Under PCRT, a member who becomes aware of an error must advise the client promptly of the error and the consequences of not correcting it, and ask the client to put it right. Acting without the client's authority would breach confidentiality, and staying silent or delaying would breach the duty of integrity and professional behaviour.
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