Professional Conduct in Relation to Taxation (PCRT)
Professional Conduct in Relation to Taxation (PCRT) is a document that has been produced to give specific guidance to accountants on how they should act when involved in tax work. PCRT puts fundamental ethical principles into context for the situations that arise when a member is involved in tax planning and tax compliance work.
This guidance, written by professional bodies for members working in tax, sets out the hallmarks of a good tax adviser, and in particular the fundamental principles of behaviour that members are expected to follow. The guidance has been recognised in the courts as ‘setting the standard’ for use by all tax advisers in the UK.
This guidance aims to make clear any tax adviser’s obligation to advise their clients or businesses accurately and thoroughly of the implications of their actions, including reputational and practical aspects. It also addresses common, as well as more complex and difficult, situations with expert commentary in an ever-changing environment.
This edition is effective from 1 January 2023. PCRT now consists of the fundamental principles and the standards for tax planning.
Compliance with PCRT is mandatory for members advising on UK tax matters. Members must be familiar with and comply with PCRT and a failure to do so may result in disciplinary action.
PCRT is supported by the following supplementary help sheets:
The first edition of the guidance was published in November 1995. Since then the guidance has been updated on a regular basis.
The guidance is followed by all members of the seven co-author bodies dealing with tax, whether in practice or in business. In addition, AIA and many other bodies and non-member professional firms also adopt it as best practice.
AIA expects our members to maintain the highest standards of practice and professional conduct. The guidance is designed to help members maintain high standards and forms part of our wider regulations and guidance. The PCRT itself is based on the five fundamental ethical principles that all tax advisers are expected to follow – namely integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour. It reinforces in a tax context existing overarching guidance and standards expected.
Members are required to comply with the Public Practice and Practising Certificate regulations contained in AIA Bye-Laws 64 to 81. Complaints alleging non-compliance can be made to the Secretary of the Disciplinary Process using the online complaints portal which can be accessed here.
Yes. The changes to the PCRT are designed to address behaviours which are damaging our profession, not to stop members from giving bona fide tax advice to clients based on an analysis of tax law as it applies to their situation, even if as sometimes may happen this might lead to surprising results. The concern is over advisers who create schemes to exploit loopholes and frustrate the will of Parliament, or who promote them to clients, or encourage clients into them. It is the behaviour of the adviser that is the focus of PCRT, not the tax outcome for the client. We expect that the vast majority of tax advice given by our members will be unaffected by the updated PCRT.
Yes. PRCT applies to all members who practice in tax including employees attending to the tax affairs of their employer.
However many of its specifics have an adviser/client situation front of mind. It has been recognised that further work is required to develop the guidance for members working in-house or in other capacities. This will be a priority for the professional bodies going forward.
This is intended to provide a legitimate protection for members from being subject to unfair accusations where the intention of Parliament genuinely is unclear. This is a balanced and fair approach.
Because legitimate, responsible tax advice – the kind HMRC have no problem with – could potentially be deemed to have elements of artificiality to it.
This reflects the fact that tax law often embodies a formulaic rather than a substantive test – that is it sets down criteria by which, e.g., a company will be deemed to be trading as opposed to non-trading, or a taxpayer’s place of residence will be determined. The tax system draws lines and responsible taxpayers understandably want to know where those lines are, and how to ensure they stay the right side of them. Providing this advice could be deemed to be encouraging artificiality, even though this is clearly responsible and necessary tax advice.
We and HMRC believe the wording in PCRT strikes an appropriate balance. The professional bodies have tested, with HMRC, how the new principles would apply to various real and illustrative situations. This revealed that members abusing their position as adviser on a range of different schemes could be subject to disciplinary action, as well as particular behaviours such as not taking a reasonable and realistic view of the facts.
The new standards in relation to tax planning have been developed in the specific UK context including the role of Parliament in making tax law and of HMRC in enforcing it.
The fundamental principles of PCRT, such as the need to act with integrity, apply universally. The rest of PCRT applies universally unless the adviser is working abroad and the legal obligations under the tax law and general law of that country require otherwise.
No. The new Standards will apply to any tax advice given after 1 March 2017. They will not apply to advice given before that date although the requirements of the existing PCRT will continue to apply until then.
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