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

Nadia, a tax manager, discovers that her client, Brightwell Ltd, has submitted corporation tax returns in which a deduction was claimed twice by mistake. The error was unintentional and the client has been told. The client now refuses to correct HMRC. What should Nadia do first?

Nadia should urge the client to disclose the error to HMRC and consider ceasing to act if it refuses. She cannot disclose to HMRC herself without permission unless legally required, because confidentiality applies, but she must not carry on as if nothing happened.

  1. AReport the matter to HMRC immediately without further discussion with the client
  2. BContinue acting and say nothing, since confidentiality takes priority
  3. CUrge the client to disclose the error to HMRC, and consider ceasing to act if it refuses, without herself disclosing to HMRC unless legally required or authorisedCorrect
  4. DAmend the return herself and send it to HMRC on the client's behalf

Explanation

Under the professional conduct guidance, the adviser must tell the client of the error and the need to correct it, and cannot disclose to HMRC without client permission unless there is a legal duty or other legal justification. If the client will not correct it, the adviser should stop acting and consider whether money laundering reporting duties arise. Reporting at once breaches confidentiality, while saying nothing breaches integrity.

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