Panellists

• Lindsey Wicks, Senior Technical Manager, Tax Policy, ICAEW
• Sophie Wales, Director of Regulatory Policy, ICAEW
• Katherine Ford, Technical Manager, Business Taxation, ICAEW

Producer

Ed Adams

Transcript

Lindsey Wicks: Hello and welcome to The Tax Track, the podcast series from ICAEW, where we explore the latest developments in the world of tax. Our subject for this episode is protecting your professional reputation. ICAEW is a regulator for the chartered accountancy profession and works to raise standards among members and maintain trust in the profession. The eagle-eyed amongst our listeners will have seen some recent tax-related disciplinary cases. Today, we want to reflect a little on what our members can do to ensure that they get things right in the first place…

Sophie Wales: It’s really easy to make inadvertent errors, and it shows the importance of staying up to date and also thinking before you act.

LW: …and provide some insight into ICAEW’s framework for improving standards.

Katherine Ford: If you do get a complaint, then try not to take it personally. Try and deal with it calmly. Give yourself time to respond.

LW: I’m Lindsey Wicks, a Senior Technical Manager for Tax at ICAEW. Today, I’m joined by two ICAEW colleagues. Welcome, Sophie Wales, Director of Regulatory Policy, and Katherine Ford, Technical Manager, Tax.

There’s always an interest in and also a fear factor around disciplinary cases. Sophie, can you explain a little more about why tax is an important area for ICAEW’s Professional Standards department?

Sophie Wales: Sure. ICAEW has more than 208,000 members and students around the world, and we supervise and monitor around 11,000 firms, and of those, around 7,000 offer tax services. Our conduct department investigates around 1,000 cases a year, covering all types of issues, but as you would expect, tax services will feature in a reasonable proportion of those cases. And this can range from simple issues like late filing of a tax return to quite complex tax avoidance or evasion schemes. It’s also common that an investigation will be considering a number of issues, some of which are tax-related, and some of which relate to a range of other matters. What we have seen recently are some disciplinary cases being taken for breaches of the Professional Conduct in Relation to Taxation – the ethical guidelines for members working in tax.

LW: And what type of issues will ICAEW investigate?

SW: So ICAEW receives complaints about all kinds of issues, but broadly, cases are taken for either ethical misconduct issues or cases of serious incompetence where a member is falling significantly short of the professional standards expected of them. So it’s about any issues where the member is bringing discredit to themselves or the profession. But it’s important to note that the bar for discredit is fairly high. It’s not about taking action for any mistake a member makes. We all make mistakes, we’re only human. But where the errors are serious or continued, this can be poor enough to discredit the profession. As I mentioned, the conduct department investigates around 1,000 cases a year, and in 2023 about 40% of those ended up at the Conduct Committee for them to consider a sanction against the member. So based on those numbers, we’re talking about maybe 400 cases a year out of over 200,000 members and students. But it is inevitable that in any profession there will be some bad apples, and it’s really important for the reputation of the profession and the protection of the public, that some individuals are excluded from the profession and that others are appropriately sanctioned for wrongdoing, and if we look at the numbers back in 2023, nine members were excluded from membership, and around 120 members and firms received a reprimand of some kind for all kinds of misconduct.

LW: Thank you. That’s some useful background, and it provides some perspective. Let’s talk a little about how members can avoid problems happening in the first place. And let’s start with ethics. What do members need to have in mind when doing tax work?

SW: So all members, whatever work they’re doing, must adhere to the ICAEW Code of Ethics. But in addition, there is the Professional Conduct in Relation to Taxation, which is known as PCRT, and this sets out tax-specific ethical guidelines for members working in tax. PCRT takes the fundamental principles of the Code of Ethics and it applies them in a tax context. It also includes some standards for tax planning that were developed back in 2017 after quite widespread criticism from politicians and the media about the role of accountants in aggressive tax avoidance. And I worked with a number of other professional bodies back in 2017 to develop those standards and to agree them with HMRC.

LW: And what are those standards?

SW: The standards include making sure that any tax planning is client specific, is appropriately disclosed to HMRC, and most importantly, is not highly artificial or highly contrived or seeks to exploit shortcomings in the relevant legislation.

LW: And Katherine, what else can trip people up when doing tax work?

Katherine Ford: Yeah, I think it’s important that people stay up to date technically. Tax changes all the time, and really, don’t do work that you’re not experienced to do. You know, you should be thinking, ‘am I the right person to be giving proper advice to this client?’ While nobody wants to lose a client, you do need to bear that in mind. There are areas in tax that fluctuate in their importance. For example, inheritance tax may be historically dealt with by solicitors, but going forward, I think members will be getting a lot more questions on it. We’ve got the agricultural property relief and business property relief cap coming in from April 2026; there’s IHT on pensions coming in from April 2027. Last year we picked up on the return of the associated companies rules. So, depending on when you did your training, you may be comfortable with that, but if you trained more recently, that might be a new area for you. We have basis period reform in the tax returns that have just gone in January and R&D is obviously an ongoing problem, both technically and ethically.

LW: In terms of keeping up to date, technically, our members will be well aware of the changes that were made to the CPD requirements from November 2023. Sophie, can you explain why the changes were made?

SW: Yes, so the main driver of the changes was to enhance trust in the chartered accountancy profession. We think it’s really important that members are, and are seen to be, competent. The new regime came into force in November 2023 and that sets minimum hours of CPD for members based on the role they do and the type of clients they work with. So really, it’s looking at the level of public interest in the work that’s taking place. And for members working in tax, many will now have to do 40 hours of CPD a year if they work with high-net-worth individuals, listed or international corporate clients, for example. And the reason for that is due to the technical complexity of tax and the fast rate at which the rules change. So it does actually take quite a bit of time to stay up to date.

LW: And what are we doing as an organisation to support members?

SW: So to support members in complying with the new CPD requirements, ICAEW made the decision to remove the paywall on a number of key faculties, including the Tax Faculty, and that means that all members can access the great resources produced by the Tax Faculty as part of their ICAEW membership. We’ve also developed an online CPD record that members can choose to use to record their CPD activity and keep track of evidence of their verifiable hours as they go throughout the year. And there is also a self-assessment tool to help members work out which CPD category they now sit in. But coming back to the professional standards angle to this, another benefit of the new CPD regime is that on disciplinary cases for competence issues, the committees can now choose to issue a remedial training order, and this would increase the minimum CPD hours for a member as an alternative to issuing a financial sanction, and some of these have been issued already.

LW: That’s really interesting. I think the fact that you can have remedial training orders will have passed a lot of people by because they would have been worried about the minimum hours requirement and not really have seen the bigger picture. But what happens if members don’t comply with these new requirements?

SW: So if a member’s found to have not complied with the CPD regulations, because they’ve not done the minimum CPD hours, or they’ve wrongly assessed themselves into a different category, and that means they’ve not done enough, then they’ll be asked to give an undertaking to remediate the shortfall. So it’s only if a member doesn’t promise to put it right, or they don’t then remedy and kind of make good the extra CPD that they get referred to the conduct department for considering disciplinary action. The new regime is really about encouraging members to do their CPD, it’s not something that’s been brought in to punish them.

LW: And apart from making sure that people are up to date in terms of their technical knowledge, how else does ICAEW help to ensure that our members are getting things right?

SW: ICAEW is very much focused on being an improvement regulator, and this means supporting members to do a good job, not just punishing them if they get things wrong, and remedial training orders is one example of that. In some cases, a financial sanction is appropriate, but we would much rather support members to get things right in the first place or to rectify something that’s gone wrong. An important element of that is ICAEW’s Practice Assurance Scheme, which provides firms with a framework of principles-based quality assurance standards to operate to and that outlines procedures to follow with clients and how to maintain the highest quality of work to make sure that members are complying with all relevant laws and regulations. As part of the Practice Assurance Scheme, the main thing is that firms are visited by the quality assurance department, who look at the firm’s procedures, check compliance with the practice assurance standards and provide recommendations for areas of improvement. And each year, those practice assurance visits have an area of focus, and in the past, that has included things like artificial intelligence or Professional Conduct in Relation to Taxation, and every firm visit is graded, and any firm with a degrading is referred to the ICAEW Practice Assurance Committee, and that committee considers whether the firm should be asked to take further action and/or issue a penalty.

LW: So we’ve talked about how members and ICAEW are working to maintain standards. Let’s move on a bit to processes where there is a concern. Can you explain a little more about how the Practice Assurance Committee works?

SW: Yeah, so the Practice Assurance Committee has responsibility for all operational matters relating to the Practice Assurance Scheme. So its primary function is to consider reports arising out of practice assurance visits where there have been serious concerns identified in the accountancy services that the firm’s providing to the public, and that’s particularly where the firm has been unwilling or unable to rectify the issues that have been found. What’s really important is that the Practice Assurance Committee operates independently of PSD staff, and it can require firms to carry out remedial action, possibly have further monitoring visits, or it can refer potential disciplinary matters to ICAEW’s Conduct Department for investigation. The committee can also propose penalties to practising certificate holders and practice assurance firms with the consent of that individual or firm.

LW: Let’s just pick up a little bit about the Conduct Department, and I’m aware that Sophie and Katherine, you both started out your careers at ICAEW working in the investigations team. What are your key takeaways from your experience? Katherine, would you like to go first?

KF: I think that a lot of disputes could be avoided, for example, if members have clear terms and conditions agreed with their clients, for example, engagement letters. What I would say is that if you do get a complaint from a client, then try not to take it personally, try and deal with it calmly, give yourself time to respond, but do respond and respond within a reasonable time frame. The Conduct Department will try and take a neutral stance on complaints, but they do need to hear both sides of the stories, so it’s important that if you do get a letter from the Conduct Department, that you try and engage with them and respond to their request for information, because that is helping put your side of the argument when they’re dealing with the complainants as well. There is extra support out there for members. For example, PCRT has really good guidance on what to do if you come across a tax discrepancy and the client may not be entirely keen to disclose it to HMRC. We also have an ICAEW ethical helpline. The Chartered Accountants’ Benevolent Association [caba] offers all sorts of support for anyone sort of struggling, personally or professionally. And there is also a Support Members Scheme, which is other members helping members who are having troubles. All these can be found on the website, but I think it’s important to remember that the Support Members Scheme is exempt from the duty to report misconduct, so anything you say to them will be in confidence and the feedback generally is that people who’ve used these avenues of support have found them really helpful.

LW: And Sophie, what are your key takeaways from your time in that team?

SW: So actually, I think I was really surprised about the volume of complaints that ICAEW receives. As I said, it’s around 1,000 a year, but also that the majority of those complaints are not issues that are sufficiently serious, and a fair few are vexatious. And what that means is that the Conduct Department actually spends a large amount of time defending our members from spurious allegations. The other reflection I’ve had is that it’s really easy to make inadvertent errors, and it shows the importance of staying up to date and also thinking before you act.

LW: And Katherine, what things might prompt an investigation by the Conduct Department?

KF: I think it can come from a variety of sources, really. Obviously, the majority would be unhappy clients or former clients. Sometimes employees will submit reports, and quite often, we see reports from incoming accountants, perhaps where the handover process hasn’t gone particularly smoothly. We also get reports from employers about their employees’ conduct, for example, where employees had internal disciplinary issues. The QAD department and other committees within ICAEW will also make reports to the Conduct Department. And then there are external bodies, such as other regulators, other professional bodies, AML supervisors, and also HMRC can also refer matters of conduct to ICAEW as well. One of the sources, perhaps not used so often, is information that’s just in the public domain. For example, it could be negative press articles or tax tribunal decisions, if we come across those.

LW: And Katherine, can you tell us, is everything investigated?

KF: So the process involves two stages. The first stage is known as the assessment stage, and that’s where the information from the complainant is looked at to see if we think there may be a potential disciplinary matter. And we also have a requirement that the evidence has to exist to support that allegation. And it’s only if both of those tests are met that a complaint would then be moved to the investigation stage.

LW: Once that investigation has been completed, at the end of that, there’s various committees that consider cases. Can you give some details about the differences between those committees, please?

KF: Of course. So, not everything gets reported to a committee, either because there’s no case to answer, or it lacks evidence, or some breaches can be dealt with by a fixed penalty order. This is normally used for minor or inadvertent regulatory breaches, which have been rectified, generally within a short space of time. It also can be used for driving convictions, for example, where there’s no custodial sentence. From the disciplinary side, the Conduct Committee is the first-level committee. That sits with at least 10 members, and it sits with a lay majority, so it’s not just accountants judging other accountants. The sanctions range anywhere from no further action up to a severe reprimand. There are powers to withdraw or suspend practising certificates or licences. Sophie already mentioned training orders can be made, and there are also remedial orders, for example, to do the work that the client wanted you to do in the first place. The Tribunal Committee hears cases referred up by the Conduct Committee for potential exclusion, cases where the Conduct Committee’s offer of a sanction was rejected by the member, or for fast-tracked cases that involve criminal convictions. And then finally, we have the Appeals Committee. This is the very final stage of appeal, but very few cases, probably, I’d say, a handful a year, ever get to this stage.

LW: Last year, HMRC consulted about raising standards in the tax advice market, and in particular, strengthening the regulatory framework and improving registration. The consultation outcome was published alongside the autumn Budget, and that signposted some changes. What do we know so far?

KF: We know that from April 2026, HMRC are going to require all practitioners who interact with HMRC on behalf of a client to have registered with HMRC before doing so. We’re expecting a technical consultation on some draft legislation at some point in 2025.

LW: And Sophie, there’s some other consultations that are imminent. They were flagged as being for early 2025 but we’re already 11 February, and we haven’t had them as yet.

SW: Yeah, so possibly Q1, but the two we’re expecting are a consultation on measures to enhance HMRC’s ability to act against a tax practitioner where the practitioner facilitates non-compliance by the taxpayer. And the second one is looking at tackling promoters of marketed tax avoidance. So in particular, new powers focused on those who own or control promoter organisations and new options to tackle legal professionals who are behind avoidance schemes.

LW: And it does feel like in terms of any new regulatory framework, it’s still a ‘watch this space’. So to sum up this episode, professional reputation is obviously very important for individual members and for firms, but also in terms of trusting the profession that indirectly benefits all of us. That’s it for this episode. Many thanks to Katherine and Sophie for your contributions.

SW: Thank you.

KF: Thank you.

LW: And thanks for listening. All of the topics we’ve discussed today are covered in more depth in the articles listed in the show notes. If you found this useful, then don’t forget to subscribe so you never miss an episode. You can rate and share the podcast, too. We’ll be back next month with the next Tax Track. In the meantime, why not check out the sister podcasts from ICAEW: Accountancy Insights provides business, finance and accountancy analysis, while each episode of Behind the Numbers offers a deep dive into a selected topic. There’s also the students’ podcast aimed at young professionals. If you’re not already a member of ICAEW’s Tax Faculty, remember that institute members can join the faculty for no additional cost. Faculty members receive our monthly TAXline bulletin. In addition, anyone can subscribe to receive our weekly TAXwire bulletin containing the latest tax news from ICAEW. Thanks for listening.