The government’s paper, Tackling Tax Avoidance and Evasion, published the day after the Budget raises some important questions for the profession.
Responding to ongoing public concern, this paper talks about the Government’s track record in clamping down on tax evasion and avoidance – for example the General Anti-Avoidance Rule and the Diverted Profits Tax included in the Finance Act - as well as floating further action.
A challenge for the profession
One proposal is aimed fairly and squarely at the door of the tax profession. The Government is ‘asking the regulatory bodies who police professional standards to take on a greater lead and responsibility in setting and enforcing clear professional standards around the facilitation and promotion of avoidance to protect the reputation of the tax and accountancy profession and to act for the greater public good.’
This challenges the profession to take a lead against tax avoidance and, as a professional body, it is something that ICAEW cannot ignore.
Time to update our tax code
The profession already has a Professional Code in Relation to Tax, supported by HMRC. Last updated in 2014, it forms the bedrock upon which any member should be providing advice. The code is frequently updated and seeks to provide guidance to members on applying the five fundamental ethical principles of our profession, namely: integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
We are updating this again to reflect the further measures to counter tax avoidance that were included in the Finance Act 2014, including accelerated payments, follower notices and high risk promoters – and we would be happy to look at it again and how it is policed.
The highest professional ethical standards
Our expectation is that ICAEW Chartered Accountants will uphold the highest professional and ethical standards when it comes to tax advice, in line with our Ethical Code and the supporting Professional Code in Relation to Tax. We want to know if any of our members are in breach of these codes and tax payers can tell us about individuals and firms they’re aware of via our website. We are also in dialogue with HMRC to ensure that, as a regulator, we are made aware of cases where the behaviour of our members when it comes to tax advice is not up to these standards so we can take the appropriate action.
A challenge for Government
While the Government has challenged bodies like ICAEW to do more, I have a challenge for Government – and that is how do they propose to police those tax advisors who are not members of a professional body.
According to HMRC, only about 70% of the 43,000 tax advisers are currently members of a professional body, so a significant segment of the tax market is not subject to the rules of a professional body, any oversight or potential disciplinary proceedings. The public rightly demands the highest technical and ethical standards from our members in tax, but equally Government needs to address the risks posed by unaffiliated agents. Not to do so, could encourage those with an appetite for aggressive tax avoidance schemes to seek out unaffiliated advisers, making a mockery of Government policy.
We want to see reforms adopted across the whole of the tax profession and not merely by those bodies that sign up to and enforce a Code.
Of course, it is still the right of every tax payer to organise to pay the right amount of tax.
The single biggest thing the government can do to tackle tax evasion and abusive or aggressive tax avoidence arrangements is to legally protect the term 'accountant' or 'tax advisor'
I am not sure what that statistic means? 70% of tax advisors not members of a professional body. There are many unregulated firms that call themselves acountants or even bookkeepers that perform tax services for their clients. Does that statistic include them? I don't think so. I think it's a much smaller proportion
I don't think it's CCAB members or CTA that the government needs to worry about its the rest
The ICAEW Chartered Accountants would uphold the highest professional and ethical standards, yet the unaffiliated agents may not be constrained by these standards. The government should concern about the threats derived from such differentiated management.
I am glad if the ICAEW won't ignore this challenge. Our profession has been hugely devalued by these events and I suspect it will be a big job to fix, if our reputation is recoverable at all.
It would be good to see all who offer tax advice adopting the guidance in Professional Conduct in Relation to Taxation (as members of ICAEW and the other major accountancy and tax representative bodies have for many years).
Well said Michael.
The Government's posturing seems to ignore the existence of the Guide to Professional conduct for those working in tax. I am no longer involved in updating this (having recused myself when I stopped giving tax advice). It is a useful document, especially given that it is approved and published jointly by the major accounting and tax professional bodies in the UK.