And it is looking to introduce similar principles for the legal profession.
The seven bodies – ICAEW, ICAS, ACCA, AAT, Chartered Institute of Taxation, Association of Taxation Technicians and the Society of Trust and Estate Practitioners – have published revised guidance for tax advisers and agents, which sets out clear professional standards in relation to the facilitation and promotion of tax avoidance.
This latest update to the Professional Conduct in Relation to Taxation (PCRT) code is the seven’s response to a challenge set by former chief secretary to the Treasury Danny Alexander when he delivered his “Yellow Budget” in March 2015.
In introducing the idea of a new strict liability criminal offence for offshore tax evasion, which would make it impossible to plead ignorance to avoid criminal prosecution, he said, “Strict liability will bring an end to the defence of ‘I know nothing, it was my accountant’.”
He then called on the tax and accountancy regulatory bodies to maximise their role in policing the profession, by setting and enforcing clear standards around the promotion of both tax evasion and tax avoidance.
These standards reflect our own principles, particularly that solicitors must be honest and act with integrity, and uphold the rule of law
The update adds five new standards for tax planning to strengthen the five fundamental principles (integrity, objectivity, professional competence and due care, confidentiality and professional behaviour) that have formed the core of the code since it was first published more than 20 years ago.
These make it clear that members “must not create, encourage or promote tax planning arrangements or structures that (i) set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation, and/or (ii) are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation”.
Members of any of the seven bodies who are found to be in breach of the PCRT code will face disciplinary action.
In a joint statement, the seven said that they believed the new standards were strong enough to meet the changed social expectations of behaviour in relation to tax planning.
“We believe these new standards for tax planning achieve an appropriate balance – making clear to the small minority of tax professionals who continue to facilitate and promote tax avoidance schemes that this behaviour is not acceptable, while enabling the vast majority of advisers to continue undertaking responsible tax planning for their clients to help ensure that they pay the right amount of tax as intended by law.
Commenting on PCRT, ICAEW president Hilary Lindsay reiterated ICAEW's message that there is no place in its membership "for those involved in the creation or promotion of artificial or contrived tax avoidance schemes".
However, she was quick to point out that the new standards "do not stop ICAEW chartered accountants from advising on tax planning but are framed to ensure members are not creating, encouraging or promoting aggressive tax avoidance schemes".
The seven bodies also urged tax advisers and agents who are not their members to commit themselves to following the code.
Although together the seven cover the vast majority of tax professionals working in the UK, but there are thousands of solicitors or barristers working in the tax industry who are not covered by PCRT.
HMRC said today that it is currently in discussions with the Solicitor’s Regulation Authority (SRA) and the Bar Standards Board “about how similar principles might be introduced for the legal profession”.
Meanwhile, the SRA says that it expects solicitors to meet the highest standards when advising on tax. A spokesperson said, “We welcome the setting out of standards for tax advisers in the new PCRT. These standards reflect our own principles, particularly that solicitors must be honest and act with integrity, and uphold the rule of law.”
Today (1 November) sees implementation of the SRA’s new continuing competence regime. This requires solicitors to declare that they have the necessary skills and expertise to provide a proper standard of service to clients.
As part of the regime, solicitors will have to keep themselves up to date on challenges to tax planning so that the work they do for clients remains of the highest standard.
The SRA stresses that “this is all the more important given HMRC’s continued review of the legitimacy of schemes”.
“Solicitors,” it adds, “should also be aware of the PCRT for the same reason.”
In a statement released today, both the treasury and HMRC gave their backing to PCRT. Treasury financial secretary Jane Ellison has also written to the seven bodies thanking them for their commitment to good tax compliance and responsible tax planning.