Tax planning when working in public practice

The key revisions in the 2026 edition of the ICAEW Code of Ethics relating to the the tax planning and related services of members in public practice include:

• the introduction into the Code, of an entirely new section 380 which applies to ICAEW members in public practice, and which sets out provisions governing tax planning services; 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 services

Section 380.5 A1 defines “tax planning services” as “advisory services designed to assist a client, whether an individual or an entity, in planning or structuring the client's affairs in a tax-efficient manner.”

Section 380.5 A2 provides examples of “tax planning services.” These include:

• Advising an individual to structure their tax affairs to achieve investment, retirement or estate planning goals.
• Advising an individual business owner on structuring their ownership and income from the business to minimise their overall taxes.
• Advising an entity on structuring its international operations to minimise its overall taxes.
• Advising on the structuring of transfer pricing arrangements, taking into account tax related transfer pricing guidelines.
• Advising on the utilisation of losses in a tax-efficient manner.
• Advising an entity on the structuring of its capital distribution strategy in a tax-efficient manner.
• Advising an entity on structuring its compensation strategy for senior executives to optimise the tax benefits.

Section 380.5 A3 clarifies that “tax planning services” do not include services that are generally referred to as tax compliance or tax preparation, which are services to assist the client in fulfilling the client’s filing, reporting, payment and other obligations under tax laws and regulations. However, if a tax service comprises both tax planning and tax compliance, the portion that relates to tax planning is covered by the new section 380.

Related services

Section 380.6 A1 covers “related services.” Where a professional accountant is engaged to provide a related service to a client that is based on or linked to a tax planning arrangement developed by the client or a third-party provider. In such circumstances, the provisions of section 380 apply to the underlying tax planning arrangement.

Section 380.6 A2 provides examples of “related services”. These include:

• Assisting the client in resolving a dispute with the tax authority on the tax planning arrangement.
• Representing the client in administrative or court proceedings regarding the tax planning arrangement.
• Implementing the tax planning arrangement for the client.
• Advising the client on an acquisition where the valuation depends on the tax planning arrangement established by the target.
• Advising the client on estate planning based on a tax planning arrangement established for the client’s business.

Distinct roles 

Section 380 distinguishes between the responsibilities of professional accountants in relation to tax planning, and the responsibilities of management and those charged with governance.

Non-compliance with tax laws and regulations

By section 380.8 A1, professional accountants must follow the NOCLAR procedures set out in section 360 of the Code, where (in the course of performing a tax planning service), 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 380.11 A1, a professional accountant is expected to:

• apply professional competence and due care (in accordance with subsection 113) when performing a tax planning service; 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 service.

By section 380.10 A1, when providing tax planning and related services, professional accountants must comply with the requirements and application material relating to client and engagement acceptance which are set out in section 320 of the Code.

By section 380.10 A2, where a professional accountant is engaged to provide a second opinion on a tax planning arrangement, the accountant should, in addition to the provisions of section 380, also comply with the requirements and application material governing the provision of second opinions which are set out in section 321 of the Code.

Basis for advising on a tax planning arrangement

Section R380.12 emphasises that a professional accountant shall only recommend or otherwise advise on a tax planning arrangement for a client if the accountant has first determined that there is a credible basis in laws and regulations for the arrangement.

Section 380.12 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 380.12 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 the client, and advise on an alternative arrangement that does have a credible basis.

By section 380.12 A3, a professional accountant may assist the employing organisation to remediate or rectify a tax planning arrangement which lacks a credible basis. This service constitutes a “related service” and includes, for example:

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

Section 380.12 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 professional accountant’s firm regarding what a reasonable interpretation of the relevant laws and regulations might be.
• Consulting with the relevant tax authorities, where applicable.

By section R380.13, 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 R380.14, 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 380.14 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 business and the reputation of the client arising from a prolonged dispute with the relevant tax or other authorities, such as adverse publicity, costs, fines or penalties, loss of management time over a significant period and potential adverse consequences to the client’s business.

Section 380.14 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 client 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 R380.15, the accountant must inform the client of this, and explain the basis of this conclusion to the client.

Arrangements involving multiple jurisdictions

Section 380.16 A1 provides that where:

• the client 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 the client 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 client might be in compliance with the tax laws and regulations of each jurisdiction.

By section 380.16 A2, in determining whether or not to advise the client 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 380.17 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 380.17 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 R380.18 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 the client.

Potential threats arising from performing a tax planning activity

Section 380.19 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 threat include:

• A self-review threat might be created when a professional accountant has recently provided a valuation service to a client for tax purposes, the output of which is then relied upon or is a key input to a tax planning service for the client.
• A self-interest threat might be created when a professional accountant has a direct financial interest in a client and the accountant is involved in designing a tax planning arrangement that has an impact on the client’s financial situation.
• Self-interest and advocacy threats might be created when a professional accountant actively promotes a particular tax position a client should adopt.
• 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 to the accountant in advising other clients on their tax planning arrangements.
• A self-interest threat might be created when a professional accountant accepts a fee that might be perceived to be excessive for an engagement to develop a tax planning arrangement for which the interpretation of the relevant tax laws and regulations is uncertain or unclear.
• Self-interest and advocacy threats might be created when a professional accountant advocates a client’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 professional accountant provides services to a client who 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 for the arrangement in laws and regulations.
• Self-interest and intimidation threats might be created when a professional accountant is threatened with dismissal from the engagement or the accountant’s firm concerning the position a client is insisting on pursuing regarding a tax planning arrangement.

Section 380.19 A2 sets out various factors that impact on the evaluation of these types of threat and section 380.19 A4 sets out safeguarding actions that the accountant can take to mitigate such threats. These include:

• Establishing the identity of the ultimate beneficiaries.
• Advising the client to structure the tax planning arrangement so that it better aligns with the underlying economic purpose and substance.
• Advising the client 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 professional accountant’s firm 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 an appropriate reviewer, who is not otherwise involved in providing the tax planning service, review any work performed or conclusions reached by the professional accountant with respect to the tax planning arrangement.
• Having the client 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 380.19 A3 sets out examples of actions that might eliminate such threats. These include:

• Referring the client to an expert outside the professional accountant’s firm who has the necessary expertise and experience to advise the client on the tax planning arrangement.
• Advising the client to structure the tax planning arrangement so that it is consistent with an existing interpretation or ruling issued by the relevant tax authorities.
• Obtaining an advance ruling from the relevant tax or other authorities, where possible.
• Advising the client not to pursue the tax planning arrangement. 

Communication of the basis of advice

Section R380.20 requires a professional accountant to explain to the client, the basis on which the accountant recommended or otherwise advised on a tax planning arrangement to the client.

Disagreement on the tax planning arrangement

By section R380.21, where the professional accountant disagrees with the client about whether or not a tax planning arrangement that the client would like to pursue has a credible basis, the accountant shall:

• inform the client of the accountant’s assessment; 
• communicate to the client, the potential consequences of pursuing the arrangement; and
• advise the client not to pursue the arrangement.

Section R380.22 provides that where the client decides to pursue the tax planning arrangement, despite the professional accountant’s advice to the contrary, the accountant shall advise the client to:

• communicate internally to the appropriate level of management, the details of the arrangement and the difference of views;
• consider making full disclosure of the arrangement to the relevant tax authorities; and
• consider communicating the details of the arrangement and the difference of views to the external auditor, if any.

By section 380.22 A1, the professional accountant might also consider it appropriate to raise the relevant matters with those charged with governance of the client.

By section 380.23, the professional accountant might also consider whether there is a need to withdraw from the engagement and the professional relationship with the client, in light of the response received to the accountant’s advice.

Tax planning developed by a third party

Where the professional accountant is engaged by the client to advise on a tax planning product or arrangement that has been developed by a third party, section R380.24 requires the accountant to:

• inform the client of any professional or business relationship that the accountant has with the third-party provider; and
• apply the provisions in section 380 with respect to the tax planning product or arrangement.

Documentation

Section 380.26 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 client on the tax planning arrangement.
• The results of discussions with the client and other parties.
• The client’s response to the accountant’s advice.
• Any disagreement with the client.

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 services involving multiple jurisdictions, they should also refer to the provisions in section 380 of the Code.