Ethics and Tax Compliance Flashcards

Flashcards about ethics and tax compliance.

Integrity

Being straightforward and honest in all professional and business relationships.

Objectivity

Not allowing bias, conflict of interest or the undue influence of others to override professional or business judgements.

Professional competence and due care

Maintaining professional knowledge and skill and acting diligently in accordance with applicable standards.

Confidentiality

respecting confidentiality, refraining from disclosing information without authority, and not using information for personal advantage.

Professional behaviour

Complying with laws and regulations and avoiding any action that discredits the profession.

Self Interest threat

Potential personal gain threatening objectivity, professional behavior, or integrity.

Self-Review threat

Re-evaluating previous work, posing a threat to objectivity.

Advocacy threat

Advocating for a client, posing a threat to objectivity.

Familiarity threat

Over-familiarity with a client, posing a threat to objectivity.

Intimidation threat

Intimidation by or threats from a client, posing a threat to objectivity.

Conduct Committee of ICAEW

Reviews complaints about members and determines if standards were followed; sanctions include reprimands, fines, training, suspension, or exclusion.

Client-specific (PCRT Standard)

Planning should be specific to the client, who is made aware of the risks.

Lawful (PCRT Standard)

Accountant and client should act lawfully and with integrity; uncertainty should be disclosed.

Disclosure & transparency (PCRT Standard)

Disclosures to HMRC should contain all relevant facts.

Advising on tax planning arrangements (PCRT Standard)

Accountants should not be involved in abusive planning arrangements.

Professional judgement & appropriate documentation (PCRT Standard)

Accountants should document the rationale for judgements in planning advice.

Factors to consider in a conflict resolution process

Relevant facts, parties, ethical issues, fundamental principles, internal procedures, and alternative actions.

When an ICAEW chartered accountant may disclose confidential information

Disclosure is permitted by law and authorized by the client or employer; disclosure is required by law; there is a professional duty or right to disclose.

Conflict of Interest

A conflict between the firm and client or a conflict between two clients.

Safeguards for conflicts of interest

Notifying the client, using separate teams and information barriers, seeking consent, using confidentiality agreements, and ceasing to act for one party.

Secondment to HMRC

Serve the interests of HMRC while on secondment and avoid conflicts of interest.

Whistleblowing

Raising a concern in good faith about a danger, risk, malpractice, or wrongdoing within an organization.

Steps when accepting a new client

Confirmation of client identity, consideration of threats to fundamental principles, and issuance of an engagement letter.

Details of an engagement letter

Scope of the engagement, roles and responsibilities, authority to disclose to HMRC, and responsibility for accuracy of returns.

Professional indemnity insurance (PII)

Required for qualified members of ICAEW in public practice; minimum amount of indemnity depends on gross fee income.

Data protection

Handling of client data must comply with the General Data Protection Regulation (GDPR), monitored by the Information Commissioner’s Office (ICO).

Steps if client provides incorrect information

Advise client to inform HMRC, explain consequences of failure to disclose, resign if client refuses and consider submitting a suspicious activity report.

Money laundering

Possessing, dealing with, or concealing the proceeds of any crime, including tax evasion.

Action if an accountant suspects money laundering

Report to Money Laundering Reporting Officer (MLRO) or National Crime Agency (NCA) via a suspicious activity report (SAR).

Money laundering penalties

Unlimited fine and/or prison sentence of up to 14 years for the main offence.

Defenses against failure to report money laundering

Employee has no suspicion and hasn't received AML training; ML is legal where it occurred; knowledge came in privileged circumstances; reasonable excuse.

Anti-money laundering procedures

Register with a supervisory authority, appoint an MLRO, train staff, establish internal procedures, carry out customer due diligence, verify client identity, and report suspicions.

Economic Crime (Anti-Money Laundering) Levy

Annual fixed fee based on UK revenue, payable by regulated entities such as accountants, solicitors, banks and insurance companies.

Tax planning

Legal tax reduction based on the intended consequence of legislation.

Tax avoidance

Legal tax reduction involving bending the rules and obtaining a tax advantage not intended by Parliament.

Tax evasion

Illegal reduction of tax by seeking to mislead HMRC; punishable by penalties and criminal prosecution.

General Anti-Abuse Rule (GAAR)

Removes tax advantages gained from abusive avoidance.

Required prevention procedures to mitigate the risk of tax evasion

Undertaking a risk assessment, introducing robust procedures, securing top-level commitment, performing due diligence, communicating the offences, and monitoring and reviewing procedures.

What is the main UK law regulating anti-money laundering for tax professionals?

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017)

What are the key obligations under MLR 2017?

Risk assessment, Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), ongoing monitoring, internal controls, suspicious activity reporting

What is the main UK law regulating anti-money laundering for tax professionals?

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017)

What are the key obligations under MLR 2017?

Key obligations include risk assessment, Customer Due Diligence, Enhanced Due Diligence, ongoing monitoring, internal controls, and suspicious activity reporting.

What law defines money laundering offences?

The Proceeds of Crime Act 2002 (POCA), which establishes various money laundering offences and the legal framework for combating them in the UK.

Name the three main money laundering offences under POCA.

1. Concealing, acquiring, or using criminal property;

2. Failure to disclose suspicion or knowledge;

3. Tipping off

What law addresses terrorist financing?

The Terrorism Act 2000.

What is a Suspicious Activity Report (SAR)?

A report made to the National Crime Agency (NCA) when there is suspicion or knowledge of money laundering or terrorist financing

Who is a SAR submitted to?

The National Crime Agency (NCA)

What is a DAML request?

A Defence Against Money Laundering request—seeking NCA consent before proceeding with a suspicious transaction

What is tipping off?

Warning a client that a SAR has been submitted or they are under investigation—this is a criminal offence under POCA

What official AML guidance applies to ICAEW members?

The ICAEW AML Guidance (aligned with MLR 2017)

What is the CCAB AML guidance?

Guidance approved by HM Treasury for the accountancy sector, followed by ICAEW, ACCA, CIOT and others

Who must appoint a Money Laundering Reporting Officer (MLRO)?

All firms subject to MLR 2017

What are the consequences of non-compliance with AML/CTF laws?

Criminal prosecution, civil penalties, disciplinary action by ICAEW