New report published on Professional Conduct in Relation to Taxation
By Charlotte Barbour, Director of Taxation
6 May 2020
Since its inception twenty-five years ago, PCRT has played a significant role in raising the professional standards of tax agents. Charlotte Barbour outlines a new report on this topic.
What is PCRT?
This question is scarcely required. After all, the members of seven professional bodies, including ICAS, are quite accustomed to being reminded of their obligations under their shared ethical guidance entitled ‘Professional Conduct in Relation to Taxation’ (PCRT).
Jointly with ICAS, the other bodies subscribing to PCRT are (in alphabetical order):
- Association of Accounting Technicians (AAT)
- Association of Chartered Certified Accountants (ACCA)
- Association of Taxation Technicians (ATT)
- Chartered Institute of Taxation (CIOT)
- Institute of Chartered Accountants in England and Wales (ICAEW)
- The Society of Trust and Estate Practitioners (STEP)
PCRT was introduced twenty-five years ago, in 1995, and has been regularly reviewed and revised since then. In its present form it sets out the Fundamental Principles and Standards for Tax Planning behaviours that all members, affiliates and students of these organisations must follow.
The latest revision of mandatory PCRT content incorporated the Standards for Tax Planning which went live on 1 March 2017. Two years later, on 1 March 2019, there was a major structural revision following feedback from users.
In addition to the mandatory content, there is also a series of supplementary help sheets:
A - Submission of tax information and ‘tax filings’
B - Tax Advice
C - Dealing with errors
D - Request for data by HMRC
E - Members’ Personal Tax Affairs
These help sheets provide additional guidance to members to help them apply PCRT in their day to day professional activities, exercise their professional judgment, and resist any undue pressure to act in an unethical manner that they might receive from employers or clients.
The restructuring of PCRT from 1 March 2019 was undertaken to bring further clarity between the mandatory elements (which were left unchanged) and the help sheets (which were significantly updated and amended, and it was agreed that these would be kept under regular review in future).
Application of PCRT
Each of the professional bodies subscribing to PCRT has a set of standards, of which PCRT is part. PCRT does not stand in isolation, and members who are in breach of it may also be in breach of other regulatory requirements.
PCRT applies to all members providing advice on UK tax matters – principals in firms, employees, and subcontractors. It pertains regardless of their membership of other professional organisations, including statutory regulators, and must be complied with no matter where in the world they work and reside.
PCRT doesn’t only affect members in professional practice. Its Fundamental Principles and Standards of Tax Planning apply to all members who practise in tax, including employees attending to the tax affairs of an employer or client, those dealing with their own tax or that of family, friends, charities etc. whether or not for payment, and those working in HMRC or other public sector bodies or government departments.
Tax agents who are not members of any of the subscribing bodies are not ‘off the hook’. All agents, including those with no professional qualifications at all, are covered by HMRC’s own Standards for Tax Agents published on 4 January 2018, which incorporate the principles of PCRT.
A new joint report entitled ‘PCRT: Raising standards across the tax profession’ has now been published, giving a brief overview of the use of PCRT by the seven professional bodies and their members, covering the period since March 2017 when the Standards for Tax Planning were introduced.
How do members use PCRT?
At its simplest level, PCRT is intended to guide members in their behaviour, to assist them and to ensure that they undertake work effectively and appropriately. In practice they use it as a reference point for professional standards, helping them make informed choices.
PCRT helps them demonstrate the required standards to their clients and employers, explain why some planning arrangements can’t be undertaken, support fellow professionals in making correct decisions, and show their own commitment to ethical practice.
More generally, members should not only serve their clients’ interests but also uphold the reputation of the tax profession and the need to take account of the wider public interest. PCRT is a powerful tool in retaining public confidence in the work of members.
In these various ways, PCRT appears to be working successfully in supporting members, their clients and the wider community by describing the standards of behaviour that clients can expect when seeking advice on their tax affairs.
How do the professional bodies use PCRT?
PCRT is widely promoted and debated by the professional bodies in their tax updates, roadshows, webinars and member communications generally, and its Fundamental Principles and Standards for Tax Planning play an essential role in promoting ethical conduct among their members.
The bodies also rely on PCRT if concerns are raised about specific members. In such cases they use the PCRT Fundamental Principles and Standards of Tax Planning to assess whether an appropriate professional approach has been adopted or whether disciplinary action needs to be taken.
Each of the professional bodies has entered into a memorandum of understanding with HMRC, allowing HMRC to report to it on the alleged misconduct by any of its members. Where such a report is received, it is expected to lead to the body instigating its procedures for the handling of a complaint.
HMRC’s report, ‘Measuring tax gaps 2019’, shows a significant reduction in the tax gap attributable to tax avoidance. The new PCRT report concludes that the professional bodies expect, but cannot confirm, that the changes to PCRT have helped to support this reduction.
