ACCA Strategic Professional · Advanced Taxation (UK) · Ethical and professional issues arising from the giving of tax planning advice
Priya, a tax adviser, is asked by a client to implement a scheme marketed by a promoter. The scheme uses a series of circular transactions with no commercial purpose other than creating a large income tax deduction, and it would need to be disclosed under the disclosure of tax avoidance schemes (DOTAS) rules. Which statement is correct?
Priya should decline to promote or assist, because the scheme is artificial and contrived with no commercial purpose beyond the tax deduction. Promoter opinions, client waivers of risk and the fee structure do not make such an arrangement acceptable under PCRT standards.
- APriya may implement it if the promoter provides a written opinion that it works
- BPriya may implement it if the client signs a waiver accepting the risk of HMRC challenge
- CPriya may implement it provided she charges a fixed fee rather than a percentage of tax saved
- DPriya should not promote or assist with it, because it is artificial, contrived and has no commercial purpose other than tax advantage, whatever the promoter's opinion or the client's waiverCorrect
Explanation
PCRT prohibits members from creating, promoting or assisting arrangements that are artificial or contrived and aim at results contrary to the intention of Parliament. A promoter's opinion, a client waiver or the fee basis does not change the nature of the scheme. DOTAS applicability signals higher risk, and the general anti-abuse rule could also apply.
Did you get it right without looking?
One question tells you little. A timed set on Ethical and professional issues arising from the giving of tax planning advice shows your real accuracy, how long you take and where you lose marks.
More Ethical and professional issues arising from the giving of tax planning advice questions
- A client has told you of a careless error in a prior return, and has now authorised you to disclose it. Which statement about the HMRC penal…
- A tax adviser holds confidential information about a client's overseas income. Which of the following is a situation in which the adviser ma…
- A tax adviser at a firm is asked by a client to prepare a tax plan. The adviser realises the proposed arrangement would be technically lawfu…
- Nadia, a tax manager, discovers that her client, Brightwell Ltd, has submitted corporation tax returns in which a deduction was claimed twic…
- Tamsin, a tax adviser, learns from a long-standing client, Orrin Ltd, that it has deliberately understated its corporation tax profits in a …
- Priya, a tax adviser, is asked by a client, Kestrel plc, to implement a scheme that produces a large UK corporation tax saving. The scheme h…