The Institute of Chartered Accountants in England and Wales has issued a new code of ethics.
It's 200 pages long.
It does not mention tax avoidance.
I do not think that is an adequate code of ethics in that case.
It's time accounting took tax avoidance seriously.
How do I know that? On 20 December Sir Amyas Morse issued his report on the so-called Loan Charge, where taxpayers who were largely unable to appraise the quality of the advice they were being given were paid via arrangements that were very obviously tax avoidance, which did not work. As he said
Unfortunately, there remains a market of unscrupulous tax advisers, including those who continue to promote loan schemes.
This is true. And there is insufficient in this code of ethics to address it.
I am discussing these issues on the Jeremy Vine Show on Radio 2 tomorrow at 12.30pm (subject to changing events).
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I was discussing the differences between the so-called loan charge compared to some agency workers who paid too little tax.
The former were, by and large, reasonably aware that the loan arrangements were at best a ruse and should not work. I have little sympathy for them although I do understand the distress that is caused when you think something has passed. Importantly, the recipients were not innocent bystanders.
The latter, often temp nurses etc. had no control over their pay arrangements, whereby the payer gave them no option on the way they worked and were paid, and now have tax bills to pay because excessive travel expenses were claimed on their behalf.
Both are examples of tax evasion rather than legitimate tax planning, the difference being the former have choice, whereas the latter tend not to (unless they don’t want to work).
I think that what is needed, is for a tightening of regulations for personal responsibility of promoters of such schemes where limited liability companies cannot then be used to allow the directors etc to walk away. That would focus attention and do more than some extra wording for ICAEW bods.
I think both are required
Yet another case of what should be a trusted regulatory body failing to regulate in the public interest.
Richard, you’ve said on a number of occasions (recently at least in relation to priority or otherwise of Labour’s proposals for re-nationalising some industries) that effective regulation would in many cases be preferable to nationalisation, but we see repeatedly that regulators seem more concerned to protect the interests of their industries than to protect the interests of the public.
I’m sure very many ‘accountants’ take tax avoidance very seriously as a lucrative part of their core business. Audit is complicit and government also either complicit or complacent. This is institutional-scale corruption, surely ?
But they are a private regulator
And that is the problem…..
“But they are a private regulator”
To all intents and purposes most industry ‘regulators’ are. The justification being that only industry insiders know enough about the industry to understand its Holy Mysteries.
Self-regulation is no regulation, or so the saying goes, and there’s much truth in it.
On the other hand the two professional areas where government has felt able to stick its neb in, because everybody gets ill and everybody has been to school and therefore fancy they have a degree of expertise: medicine and education, results have been mixed to put it mildly.
“I’m sure very many ‘accountants’ take tax avoidance very seriously as a lucrative part of their core business”
Nope it is for the many accountants a bit of icing on the cake – most work is very much focused on compliance work.
And many accountants lack the technical expertise to truly understand the workings of tax schemes – which is why they generally ‘white label’ or sell on something created by the promoters.
No accountant should ever sell what they have do not understand
That is a definition of negligence
And in this case there is no excuse for not knowing – the abuse is written all over the schemes
The problem with loan charge arrangements is much wider than accountants and ethical codes won’t solve it. Many promoters are solicitors, ex solicitors, barristers, former HMRC staff and non members of regulated bodies. Basically unscrupulous individuals making a fast buck. Of course some are accountants too. The only serious response is to prosecute these people and take their proceeds of crime from them. That sadly takes too much effort and money. So the long running fiasco that failed to be terminated by the unsuccessful “Rossminster” case 40 years ago will continue.
I fear so
[…] This is in The Times this morning:This is the article to which it refers. […]
Perhaps you addressed it in your interview, Richard, but I didn’t hear it. Is there a transcript? What you like the ICAEW’s code of ethics say about tax avoidance?
The new code of ethics has a cross-reference to the ICAEW’s guidance on professional conduct in relation to defaults or unlawful acts – https://www.icaew.com/membership/regulations-standards-and-guidance/ethics/defaults-or-unlawful-acts-guidance – but I was expecting to see some reference to the professional bodies’ joint statement on Professional Conduct in Relation to Taxation (PCRT) – https://www.icaew.com/technical/tax/pcrt
The last would have helped
But I would have liked explicit statement on the issue, seeking the spirit of the law and acting within it
The absence means this is not about ethics at all