Following the announcement of the new Professional Conduct in Relation to Taxation (PCRT) rules announced in November last year and effective from March this year accountants and tax advisers will be under considerable additional pressure to ensure that work undertaken, advice given and any introductions made do not fall into the grey void of what has become ‘unacceptable tax planning’.
The Guidance outlines that any tax planning should meet the standards set out and that any planning should:
- be client-specific;
- be lawful;
- involve full disclosure and transparency;
- not be contrary to the clear intention of parliament; and
- that members must exercise professional judgement and maintain appropriate documentation.
Clearly the first standard is to avoid any mass produced ‘schemes’, although in most cases this would be restricted as a result of DOTAS, however, all advisers should provide client specific tax planning, rather than blanket advice.
The second, third and fifth are relatively straightforward.
The key area of contention remains with the fourth – contrary to the clear intention of Parliament. In this case it is then important to consider the intention of Parliament when implementing specific legislation and anti-avoidance and where planning seeks to thwart particular legislation or exploit loopholes this would clearly be contrary to the intention of Parliament. However, this standard also restricts tax planning which is highly artificial or contrived.
As such, this means that moving forward all accountants and tax advisers need to bear the PCRT rules in mind when undertaking any tax planning or advising clients in respect of tax. They should ask themselves whether they (or the client or the ‘product’ in question) is seeking to deliberately sidestep the intention of Parliament and also whether the planning is artificial or contrived. If it is, then they need to consider whether professionally they should continue to act or advise the client against such steps.
Here at Fusion Partners, we’ve taken considerable time to review planning, procedures and advice in light of these new rules to ensure that we remain compliant with the required professional standards – we’d recommend that any advisers considering them do the same.