Tax advisors have been given new guidelines on how best to deal with difficult situations. Seven of the UK’s leading professional bodies in the tax industry have updated previous guidance on dealing with legal and practical difficulties in a new document called Professional Conduct in Relation to Taxation (PCRT).

The guidelines aim to help tax advisors attain high standards of ethics whilst helping their clients manage their tax obligations and during the dealings they will inevitably have with Her Majesty’s Revenue and Customs (HMRC).

The 2014 update includes a chapter on tax evasion, avoidance and planning, which has been enhanced from previous guidelines that were issued.

General Anti-Abuse Rule to Combat Tax Avoidance

The PCRT offers tax advisors guidance on the General Anti-Abuse Rule (GAAR), which has been introduced by the government to counteract the tax advantages gained by people using what are known as abusive tax avoidance measures.

The GAAR applies to stamp duty and corporation, income, inheritance, capital gains, inheritance, residential property and petroleum revenue taxes.

The government believes that the GAAR will create a fairer climate by putting taxpayers off schemes that are deemed abusive within the tax system.

The new PCRT document provides guidance on HMRC visits and on professional standards during HMRC consultations and secondments, and on how best to advise clients who want to put right tax irregularities in their past. There is also a section in the document on electronic filing.

The Role of the Tax Advisor

The PCRT guidelines highlight how tax advisors have an obligation to advise clients thoroughly and accurately, making certain that they understand both the practical and reputational consequences of their actions in relation to taxation.

Rosalind Upton, a member of the Council of the Chartered Institute of Taxation and the chairperson of the working party which created the PCRT, said the document gives practical, concise and clear help for advisors dealing with such situations as a client receiving a repayment of more than they are entitled to or one who does not want to make a truthful disclosure to HMRC.

HMRC was consulted over the guidelines and has approved it as an acceptable form of advice.

Key Responsibilities for Professionals

The guidelines are based on the fundamental principles that advisors must be honest and straightforward and must avoid conflicts of interest and making judgements based on bias or a third party’s influence.

They have a responsibility to maintain their skills and knowledge to enable them to give correct and up-to-date advice, and they must respect confidentiality at all times, unless they have a legal or professional duty to break this rule.

The PCRT aims to give guidance for tax advisors dealing with such areas as tax returns and accessing HMRC data, as well as in managing irregularities and disclosures.

The guidelines aim to offer both practical and legal help based on the law in November 2013, but the professional bodies behind the guidance have warned that it should not be used as a substitute for specialist legal advice.

It is a joint document from the Association of Chartered Certified Accountants, the Institute of Chartered Accountants in England, Wales and Scotland, the Chartered Institute of Taxation, the Association of Taxation Technicians, the Institute of Indirect Taxation, and the Society of Trust and Estate Practitioners.