While preparing a client's tax return, an ICAEW member finds that last year's return omitted £6,000 of income. The client refuses to tell HMRC. What should the member do under professional conduct guidance?
Answer and explanation
Correct answer: D. Explain the consequences and, if the client refuses to disclose, cease to act and consider reporting obligations
- Step 1: Professional Conduct in Relation to Taxation requires members not to be associated with a return they know to be incorrect.
- Step 2: If the client will not correct the error, the member must stop acting and consider reporting obligations.
Answer
Explain the consequences and, if the client refuses to disclose, cease to act and consider reporting obligations.
Why not the others: Confidentiality is not absolute, and members must also consider anti-money-laundering duties. Acting without the client's authority breaches confidentiality. Continuing to act would associate the member with a known error.
Practise more Objectives, types of tax and ethics.
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