Tax planning for members in business

The key revisions in the 2026 edition of the ICAEW Code of Ethics relating to the the tax planning activities of members in business include:

• the introduction into the Code, of an entirely new section 280 which applies to ICAEW members in business, and which sets out provisions governing tax planning activities; and
• ICAEW additional material (shaded in blue) which clarifies the relationship with these new provisions, and the provisions set out in Professional Conduct in Relation to Taxation (PCRT).

Definition of tax planning activities

Section 280.5. A1 defines “tax planning activities” as: “advisory activities designed to assist an employing organisation in planning or structuring its affairs in a tax-efficient manner”.

Section 280.5 A2 provides examples of tax planning activities. These include:

• advising management and the employing organisation on: structuring international operations to minimise the organisation’s overall taxes;
• structuring of transfer pricing arrangements, taking into account tax related transfer pricing guidelines;
• utilisation of losses in a tax-efficient manner for the employing organisation;
• structuring of the organisation’s capital distribution strategy in a tax-efficient manner;
• structuring the employing organisation’s compensation strategy for senior executives to optimise the tax benefits for the employing organisation;
• structuring the employing organisation’s investments to take advantage of tax incentives offered by jurisdictions or localities; and
• in the case of a non-profit employing organisation, advising that organisation on how to structure its business to avoid breaching its non-profit status.

Section 280.5 A2 clarifies that tax planning activities do not include activities that are generally referred to as tax compliance or tax preparation, which are activities to assist the employing organisation in fulfilling its filing, reporting, payment and other obligations under tax laws and regulations.

However, where a tax activity comprises both tax planning and tax compliance, the portion that relates to tax planning will be covered by the new section 280.

Related activities

Section 280.6 A1 covers “related activities". Where a professional accountant is involved in performing a related activity for an employing organisation, that is based on or linked to a tax planning arrangement developed by a third-party provider, the provisions of section 280 apply to the underlying tax planning arrangement.

Section 280.6 A2 provides examples of related activities. These include:

• assisting the employing organisation in resolving a dispute with the tax authority on the tax planning arrangement;
• representing the employing organisation in administrative or court proceedings regarding the tax planning arrangement;
• implementing the tax planning arrangement for the employing organisation; and
• advising the employing organisation on an acquisition where the valuation depends on the tax planning arrangement established by the target.

Distinct roles 

Section 280 distinguishes between the responsibilities of professional accountants in relation to tax planning, and the responsibilities of those charged with governance.

Non-compliance with tax laws and regulations

By section 280.8 A.1, professional accountants must follow the NOCLAR procedures set out in section 260 of the Code, where (in the course of performing a tax planning activity), they become aware of tax evasion or suspected tax evasion, or other non-compliance or suspected non-compliance with tax laws and regulations by an employing organisation, management, those charged with governance or other individuals working for or under the direction of the employing organisation.

• ICAEW guidance on NOCLAR

In addition, by section 280.11.A1, a professional accountant is expected to:

• apply professional competence and due care (in accordance with subsection 113) when performing a tax planning activity; and
• have an inquiring mind, and exercise professional judgment (in accordance with section 120) when considering the specific facts and circumstances relating to the tax planning activity.

Basis for advising on a tax planning arrangement

Section R280.12 emphasises that a professional accountant shall only recommend or otherwise advise on a tax planning arrangement for an employing organisation if the accountant has first determined that there is a credible basis in laws and regulations for the arrangement.

Section 280.12 A1 emphasises that the determination of whether or not there is a credible basis involves the exercise of professional judgment by the professional accountant; and that the determination will vary from jurisdiction to jurisdiction, based on the relevant laws and regulations at the time.

By section 280.12 A2, where a professional accountant determines that there is no credible basis for a proposed tax planning arrangement, he or she may explain their rationale to a superior, and advise on an alternative arrangement that does have a credible basis.

By section 280.12 A3, a professional accountant may assist the employing organisation to remediate or rectify a tax planning arrangement which lacks a credible basis. Such type of activity falls within the definition of a “related activity”, and includes, for example:

• Assisting the employing organisation to restructure a tax planning arrangement to achieve a credible basis as part of a tax dispute resolution activity.
• Agreeing with the employing organisation appropriate changes to the tax planning arrangement to achieve a credible basis as part of representing the employing organisation in administrative or court proceedings.

Section 280.12 A4 sets out examples of the actions that a professional accountant might take to determine whether or not there is a credible basis in relation to a particular tax planning arrangement. These include:

• Reviewing the relevant facts and circumstances, including the economic purpose and substance of the arrangement.
• Assessing the reasonableness of any assumptions.
• Reviewing the relevant tax legislation.
• Reviewing legislative proceedings that discuss the intent of the relevant tax legislation.
• Reviewing relevant literature such as court decisions, professional or industry journals, and tax authority rulings or guidance.
• Considering whether the basis used for the proposed arrangement is an established practice that has not been challenged by the relevant tax authorities.
• Considering how likely the proposed arrangement would be accepted by the relevant tax authorities if all the relevant facts and circumstances were disclosed.
• Consulting with legal counsel or other experts within or outside the employing organisation regarding what a reasonable interpretation of the relevant tax laws and regulations might be.
• Consulting with the relevant tax authorities, where applicable.

By section R280.13, where the professional accountant becomes aware of circumstances that might impact the previous determination of the credible basis, he or she shall re-assess the validity of that basis. 

Consideration of overall tax planning advice

By Section R280.14, in addition to determining whether or not a tax planning arrangement has a credible basis, the professional accountant is required to exercise professional judgment and then go on to consider the reputational, commercial and wider economic consequences that could arise from the way stakeholders might view the arrangement.

Section 280.14 A1 provide examples of the matters to be taken into account as part of the consideration of “reputational and commercial consequences”. These include implications impacting on the reputation and business of the employing organisation or the profession, arising from a prolonged dispute with the relevant tax or other authorities, adverse publicity, costs, fines or penalties, loss of management time over a significant period, and potential adverse consequences for the employing organisation.

Section 280.14 A2 provide examples of the matters to be taken into account as part of the consideration of “wider economic consequences”. These include the professional accountant’s general understanding of the current economic environment and the impact of the tax planning arrangement on the tax base of the jurisdiction, or the relative impacts of the arrangement on the tax bases of multiple jurisdictions, where the employing organisation operates.

Explaining the basis of conclusions

Where a professional accountant:

• considers the reputational, commercial and wider economic consequences; and then
• decides not to recommend or otherwise advise on a tax planning arrangement,
  then by section R280.15, the accountant must inform management (and, if appropriate, those charged with governance) and explain the basis of this conclusion.

Arrangements involving multiple jurisdictions

Section 280.16 A1 provides that where:

• the employing organisation is obtaining a tax benefit from accounting for the same transaction in more than one jurisdiction (especially if there is no tax treaty between the jurisdictions); and
• a professional accountant becomes aware of this,
  the accountant may advise management to disclose the particular facts and circumstances, and the tax benefits derived from the transaction in the different jurisdictions, to the relevant tax authorities. 

The professional accountant may advise such disclosure even though the employing organisation might be in compliance with the tax laws and regulations of each jurisdiction,

By section 280.16 A2, in determining whether or not to advise management to make such disclosure, the professional accountant might consider the following factors:

• The significance of the tax benefit in the relevant jurisdictions.
• Stakeholders’ perceptions of the employing organisation if the facts and circumstances were known to the stakeholders.
• Whether there are globally or nationally accepted principles or practices regarding disclosure of similar situations to the tax authorities in the relevant jurisdictions.

Circumstances of uncertainty

Section 280.17 A1 notes that uncertainty in determining whether or not a credible basis for a proposed tax planning arrangement exists, may pose threats to compliance with the fundamental principles.

Section 280.17 A2 provides examples of the types of factors creating uncertainty, such as difficulty in establishing facts; conflicting laws and regulations; lack of any legal precedent; lack of clarity regarding the economic purpose and substance of the tax planning arrangement; and lack of clarity about the ultimate beneficiaries of the tax planning arrangement.

Section R280.18 provides that where there is uncertainty about whether a tax planning arrangement is in compliance with the relevant tax laws and regulations, the professional accountant shall discuss the uncertainty with management and, if appropriate, those charged with governance.

Potential threats arising from performing a tax planning activity

Section 280.19 A1 notes that performing a tax planning activity for an employing organisation might create a self-interest, self-review, advocacy or intimidation threat.

Examples of such threats and the actions include:

• A self-review threat might be created when a professional accountant has recently performed a valuation activity for the employing organisation for tax purposes, the output of which is then relied upon or is a key input to a tax planning activity for the employing organisation.
• A self-interest threat might be created when a professional accountant’s career advancement prospects depend on developing a creative tax planning arrangement for which the interpretation of the relevant tax laws and regulations is unclear.
• A self-interest threat might be created when a professional accountant participates in an incentive compensation scheme impacted by the accountant’s design of a tax planning arrangement.
• A self-interest threat might be created when a professional accountant is in possession of confidential information obtained from the accountant’s involvement in formulating or drafting tax policy, laws or regulations for a government agency and the confidential information would be valuable in advising the accountant’s employing organisation in its tax planning arrangements.
• Self-interest and advocacy threats might be created when a professional accountant advocates an employing organisation’s position in a tax planning arrangement which the accountant previously advised on before a tax authority when there are indications that the arrangement might not have a credible basis in laws and regulations.
• Self-interest and intimidation threats might be created when a dominant owner or leader of the employing organisation exerts significant influence over the design of a particular tax arrangement, in a way that might influence the accountant’s determination that there is a credible basis in laws and regulations.
• Self-interest and intimidation threats might be created when a professional accountant faces potential dismissal over the position the employing organisation is insisting on pursuing regarding a tax planning arrangement.

Section 280.19 A2 sets out various factors that impact on the evaluation of these types of threat and section 280.19 A4 set out examples of safeguarding actions that the professional accountant can take to mitigate such threats. These include:

• Establishing the identity of the ultimate beneficiaries. 
• Advising the employing organisation to structure the tax planning arrangement so that it better aligns with the underlying economic purpose and substance.
• Advising the employing organisation to structure the tax planning arrangement based on an established practice that is currently not subject to challenge by the relevant tax authorities or is known to have been accepted by the relevant tax authorities.
• Consulting with a legal counsel or other expert within or outside the employing organisation in the relevant tax areas.
• Obtaining an opinion from an appropriately qualified professional (such as legal counsel or another professional accountant) regarding the interpretation of the relevant tax laws and regulations as applied to the particular circumstances.
• Having a tax expert, who is not otherwise involved in the tax planning activity, review any work performed or conclusions reached by the professional accountant with respect to the tax planning arrangement.
• Having the employing organisation provide full transparency about the tax planning arrangement to the relevant tax authorities, including the goals, business and legal aspects, and ultimate beneficiaries of the tax planning arrangement.

Section 219 A3 sets out examples of actions that might eliminate such threats. These include:

• Advising the employing organisation to structure the tax planning arrangement so that it is consistent with an existing tax interpretation or ruling issued by the relevant tax authorities.
• Obtaining an advance ruling from the relevant tax or other authorities, where possible.
• Advising management not to pursue the tax planning arrangement.

Communication of the basis of advice

Section R280.20 requires a professional accountant to explain to management (and to those charged with governance, if appropriate) the basis on which the accountant recommended or otherwise advised on a tax planning arrangement to the employing organisation.

Disagreement on the tax planning arrangement

By section R280.21, where the professional accountant disagrees with their immediate superior (or other responsible individual within the employing organisation) about whether or not a tax planning arrangement has a credible basis, the accountant shall:

• inform the immediate superior (or other responsible individual within the employing organisation), and if appropriate, those charged with governance, of the accountant’s assessment;
• communicate to them, the potential consequences of pursuing the arrangement; and
• advise them not to pursue the arrangement.

Section R280.22 provides that where the immediate superior (or other responsible individual within the employing organisation) decides to pursue the tax planning arrangement, despite the professional accountant’s advice to the contrary, the accountant shall consider:

• taking steps to have the details of the arrangement and the difference of views communicated with the next higher level of authority within the employing organisation and, if appropriate, those charged with governance;
• advising the employing organisation to make full disclosure of the arrangement to the relevant tax authorities; and
• communicating the details of the arrangement and the difference of views to the employing organisation’s external auditor, if any.

By section 280.22 A1, the professional accountant might also consider whether there is a need to resign from the employing organisation, in light of the response received to his or her advice.

Documentation

Section 280.23 A1 provides that, when performing a tax planning activity, a professional accountant is encouraged to document on a timely basis:

• The purpose, circumstances and substance of the tax planning arrangement.
• The identity of the ultimate beneficiaries.
• The nature of any uncertainties.
• The accountant’s analysis, the courses of action considered, the judgments made, and the conclusions reached in advising the employing organisation on developing the tax planning arrangement.
• The results of discussions with the accountant’s immediate superior and appropriate levels of management, those charged with governance and other parties.
• The response of the accountant’s immediate superior, management and, where applicable, those charged with governance to the accountant’s advice.
• Any disagreement with the accountant’s immediate superior, management and, where applicable, those charged with governance.

Relationship between the tax planning revisions and PCRT

ICAEW is party to PCRT. The 2026 Code includes additional ICAEW specific material which clarifies the relationship between the IESBA tax planning revisions and the provisions of PCRT.

This ICAEW specific material states that:

• Members undertaking any UK tax work must comply with PCRT, irrespective of where they are based.
• PCRT (effective from 1 January 2026) has been endorsed by the UK Tax authority and is considered to be no less stringent than the tax planning provisions contained in sections 280 and 380 of the Code. Therefore, compliance with PCRT satisfies a member’s ethical obligations in relation to UK tax planning and related services.
• A member who is based overseas or who is acting for a client that is subject to the tax jurisdiction of another country could be subject to more onerous legal obligations under the tax law and/or general law of that country. Except in that situation, a member must apply PCRT to professional activities with non-UK aspects.
• Where a member is providing tax planning and related activities involving multiple jurisdictions, they should also refer to the provisions in section 280 of the Code.