Sir Owais Mirchawala:

ATX Ethics requirements:

(a) Knowledge obtained from advising other clients. (5 marks) December20

Knowledge obtained from advising other clients

–We have experience of advising clients trading from permanent establishments situated overseas.
.–We will be able to use this general experience and expertise for the benefit of client.
–However, we must not use any confidential information obtained as a result of our professional and
business relationships for the benefit of X Ltd (or any other client).Confidentiality is one of the
fundamental principles of ethics within ACCA’s Code of Ethics and Conduct.
–This principle of confidentiality applies to confidential information obtained in respect of both ex-
clients and continuing clients

(b) Becoming Fiona’s tax advisers. (5 marks) June 21

Becoming X’s tax advisers

The actions we should carry out before we become client tax advisers:
–We must give consideration to the fundamental principles of professional ethics, for example,
integrity and professional competence and due care. This requires us to consider whether becoming
tax advisers to client would create any threats to compliance with these principles.
If any such threats are identified, we should not accept the appointment unless the threats can be
reduced to an acceptable level via the implementation of safeguards.----- move to the UK will
significantly affect her tax affairs, and we must be sure that we are able to deal with the technical
aspects of these matters.
–We must assure ourselves that client is not involved in any form of money laundering.
–We should obtain permission from client to contact her existing tax advisers in order to ensure that
there is nothing in the past which would preclude us from accepting the appointment on ethical
grounds.
–We should issue a letter of engagement setting out the terms of our agreement with client and our
agreed responsibilities

(c) Hum Ltd – refund of corporation tax. (5 marks) Sep/dec 22

X Ltd – refund of corporation tax
We should assist -----in investigating whether or not there was a valid reason for the refund. If a
valid reason cannot be found, we would have to conclude that the refund was made as a result of an
error on the part of HM Revenue and Customs (HMRC). In these circumstances:
–We should inform client that the amount should be repaid and that failing to do so would be a civil
and/or a criminal offence.
–HMRC should be informed of their error as soon as possible in order to minimise any interest and
penalties which may otherwise become payable. We should inform HMRC only if our letter of
engagement authorizes us to do so. Otherwise, we should advise client to do so.
–In the unlikely event that client is unwilling to return the money, we would have to consider
ceasing to act as X Ltd’s tax advisers. We would then have to notify the tax authorities that we no
longer act for the company, although we would not provide them with any reason for our action.
The firm’s money laundering reporting officer would also have to consider whether or not it is
necessary to make a report under the money laundering rules

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 Sir Owais Mirchawala:

(d) Set out the information that would be required, and the action(s) that should be taken by the firm
before it agrees to become tax advisers to Farina and Lauda. (5 marks) specimen exam

Becoming tax advisers to X and Y:

Information required in respect of X and Y:

– evidence of their identities; and
– their addresses.
Action to be taken by the firm:
– The firm should contact their existing tax advisers. This is to ensure that there has been no action
by either X or Y which would, on ethical grounds, preclude the acceptance of the appointment.

– The firm should consider whether becoming tax advisers to X and Y would create any threats to
compliance with the fundamental principles of professional ethics. Where such threats exist, the
appointment should not be accepted unless the threats can be reduced to an acceptable level via
the implementation of safeguards.

With this in mind, the firm must ensure that it has sufficient competence to carry out the
sophisticated tax planning required by X and Y.

In addition, it is possible that providing advice to X and Y on the sale of their business could give rise
to a conflict of interest, as a course of action (for example, the timing of the sale) which is beneficial
for one of them may not be beneficial for the other. The firm should obtain permission from both X
and Y to act for both of them and should consider making a different member of the firm
responsible for each of them

(e) Plad Ltd – unreported chargeable gain. (5 marks)

The company has a responsibility to report this omission to HM Revenue and Customs (HMRC) and
to pay the outstanding corporation tax. It will be committing tax evasion, a criminal offence, if it fails
to do so.
– HMRC will charge X Ltd interest on any tax which becomes payable.
Our firm
– We should investigate how this error arose and consider whether or not there are likely to be
further errors.
– We will not retain a client which is engaged in deliberate tax evasion, as this poses a threat to the
fundamental principles of integrity and professional behaviour. Accordingly, we could not continue
to act for X Ltd unless the chargeable gain is disclosed to HMRC.
– If we were to cease to act for X Ltd, we would notify HMRC, although we would not provide them
with any reason for our action.

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 Sir Owais Mirchawala:

(f) Error in the corporation tax return of Binni Ltd

Error in the corporation tax return of X Ltd
Interest on underpaid tax
X Ltd will be regarded as having underpaid corporation tax on each of the four payment dates for
the year ended-------.
Accordingly, interest may be charged from -------- years on any amounts of underpaid corporation
tax.
Disclosure of the error
The error must be disclosed to HM Revenue and Customs (HMRC). It is not acceptable for our firm
to continue to act for the company unless this disclosure is made.
X Ltd can disclose the information or it can authorize us to do so. However, we must not disclose the
error unless we have permission from the company.
Voluntary disclosure of the error may result in a reduction in any penalty which may be charged by
HMRC.
We should notify the company of the following consequences of not informing HMRC of the error:
– If the company refuses to disclose the error, we will advise HMRC that we no longer act for the
company. We would not, however, give any reason for our actions.
– Non-disclosure of the errors would also represent tax evasion by the company. This could result in
criminal proceedings under both the tax and money laundering legislation.

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