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

Lena Park Ltd, a UK company, wants to route consultancy income through an overseas entity in a low-tax jurisdiction with no real activity there, to cut UK corporation tax. The adviser has limited knowledge of the controlled foreign company rules and the general anti-abuse rule. Which response best satisfies the Code of Ethics?

The adviser should decline the engagement or obtain suitable specialist expertise, because professional competence and due care require adequate knowledge before giving advice. A disclaimer or fee level does not remedy inadequate competence, and the adviser must also consider whether a substance-free overseas arrangement is acceptable under professional behaviour.

1. AProvide the advice as the client is paying a high fee and the rules are unlikely to be tested
2. BProvide the advice but include a general disclaimer that it may not be effective
3. CDecline the work or obtain suitable expertise or assistance, because professional competence requires the adviser to have adequate knowledge and to act diligently, and consider whether the arrangement is acceptable at allCorrect
4. DRely on the client's own legal counsel and say nothing about the risks