Tax Advice: Maintaining Professional Standards
Tax is an increasingly visible aspect of the rounded advice lawyers must provide to their clients. The Law Society’s guidance specifically aimed at solicitors advising on tax is important reading, summarising the high professional standards they are expected to maintain.
For instance, if the solicitor is expected to advise on tax matters, they are under a duty to exercise reasonable care and skill in providing tax advice – including on all relevant tax matters within the scope of the retainer.
Tax law is complex and increasingly dynamic area of regulation. The need for lawyers to ensure they can properly advise and make the correct decisions is vital. Given that clients range from individuals and small charities to large international companies investing in, and operating in the UK, it is clear that tax advice touches on just about every aspect of legal work.
The Society makes clear that solicitors providing such advice should be aware of their roles and duties in law and regulation in helping and supporting people to navigate how tax law and practice applies. They also need to understand the status of, for instance, HMRC’s own guidance and the role of HMRC tax clearances.
The guidance usefully summarises key aspects of the frameworks that apply to solicitors when providing tax advice, including the contractual, tortious, fiduciary, statutory and regulatory rules.
As can be expected, solicitors have a duty to ensure there are procedures in place to reduce the risk of tax evasion. It is a criminal offence to facilitate, undertake or knowingly be concerned in tax evasion.
Government plans
The fact that there was a call for evidence on raising standards in the tax advice market last March demonstrates the concern government seems to have around professional standards. That consultation closed in August, a report setting out a summary of responses and ‘next steps’ was published in November 2020. The government’s planned ‘next steps’ include:
To raise awareness of the Standard and review HMRC powers to enforce the HMRC’s standard for agents, including “intervention” to enhance taxpayer protection and improve standards.
Consult on introducing a requirement for all tax advisers to hold professional indemnity insurance, with consideration of a definition of tax advice and the activities that should be in scope. Considerations are to include impacts and burdens on tax advisers, taxpayers and the market; options for enforcement; and the operability of the policy.
Government said it will also continue working in partnership with adviser professional bodies, such as the Law Society, to understand the role they play in supervising and supporting their members and raising standards in the profession.
Practitioners will find useful further resources and guidance to which the Society signposts, including HMRC’s internal guidance and the above-mentioned standard for agents.
Solicitors are also urged to familiarise themselves with the Professional Conduct in Relation to Taxation (PCRT), a standard developed by seven other professional bodies including the Chartered Institute of Taxation and the Society of Trust and Estate Practitioners (but not actually adopted by the Law Society).
If you would like us to cover an issue in the next NGM Tax Law Newsletter, we would be pleased to hear from you