In the report, Accountancy Europe finds that “dealing with the complexities of the tax system is one of the most challenging aspects of doing business”, and that the issues are “particularly acute for SMEs” as they “are exposed to a wide variety of tax risks”. This includes tax risks: 

• occurring at particular points in the business’s lifecycle, for example, when the business expands;
• resulting from structural issues, such as poor accounting records; and
• potentially overpaying tax as a result of, for example, failure to use tax simplifications for small businesses or start-ups, or incorrect structuring of the business, thereby reducing the funds available for investment. 

Some of these risks are outsourced to the SME’s tax adviser. The adviser may also face additional specific risks, including risks arising from: 

• not having the full picture of how the SME operates and its long-term plans;
• failing to take into account changes in the SME’s circumstances; 
• deliberate acts by the SME that amount to tax evasion and/or fraud; and
• giving advice on areas of tax which are new, have been subject to change or where the adviser has little or no previous experience of the area.  

Failure to address tax risk could have severe consequences for the SME or their adviser, including financial loss and reputational damage. Therefore, Accountancy Europe recommends that both the SME and the adviser “take active steps to manage tax risks”.   

Professional Conduct in Relation to Taxation

Complying with Professional Conduct in Relation to Taxation (PCRT) should mean that these risks are managed to the extent that they align with PCRT requirements. For example, the Fundamental Principle of Professional Competence and Due Care and the Standards for Tax Planning that planning must be Client Specific and Lawful are particularly relevant to managing these risks. 

Accountancy Europe’s report includes checklists designed to help SMEs and their advisers to identify common tax risks. The checklists draw on tax rules and processes in a number of countries and should be customised by the user as needed to be country specific, for example, reflecting tax law and systems and processes as they apply in the UK. The report is timely given that legislation included in Finance Bill 2025-26 will impose new obligations on tax advisers, as explained in a recent article.

Accountancy Europe

The aim of Accountancy Europe is to “translate [the] professional accountant’s daily experience from across Europe to inform the European policy debate”. It has 49 member bodies, including ICAEW, across 35 countries.