COE ETHICS IN TAX PRACTICE

1.
210 (October 87)
STATEMENT 1.210
PROFESSIONAL ETHICS
ETHICS IN TAX PRACTICE
(Issued October 1987)
FUNDAMENTAL PRINCIPLES
1. The fundamental principles to be observed when developing ethical requirements relating to tax
practice include all four Fundamental Principles by which a member is governed in the conduct of his
professional relations with others. These principles are enumerated in the Explanatory Foreword to
Professional Ethics, paragraphs 1 to 4 and expanded upon in the Statements and related Guidelines.
DEVELOPMENT OF THE FUNDAMENTAL PRINCIPLES
2. A member rendering professional tax services is entitled to put forward the best position in favour of
his client, provided he can render the service with professional competence, it does not in any way
impair his standard of integrity and objectivity, and is in his opinion consistent with the law. He may
resolve doubt in favour of his client if in his judgment there is reasonable support for his position.
3. A member should not hold out to clients the assurance that the tax return he prepares and the tax
advice he offers are beyond challenge. Instead, he should ensure that his clients are aware of the
limitations attaching to tax advice and services so that they do not misinterpret an expression of
opinion as an assertion of fact.
4. A member who undertakes or assists in the preparation of a tax return should advise his client that the
responsibility for the content of the return rests primarily with the client. The member should take the
necessary steps to ensure that the tax return is properly prepared based on the information received
from the client.
5. Tax advice or opinions of material consequence given to a client should be recorded either in the
form of a letter to the client or in a memorandum for the files.
6. A member must not associate himself with any return or communication which he has reason to
believe:
(a) contains a false or misleading statement;
(b) contains statements or information furnished by the client recklessly or without any real
knowledge of whether they are true or false; or
(c) omits or obscures information required to be submitted and such omission or obscurity would
mislead the Inland Revenue Department.
If any of the above situations prevails, the member's responsibility is to resign from acting as the
client's tax representative. Having resigned the member should:
(a) inform the Inland Revenue Department that he has withdrawn his services.
(b) give no further information to the authorities without the consent of the client, unless required
to do so by law.
7. A member may prepare tax returns involving the use of estimates if such use is generally acceptable
or if it is impractical under the circumstances to obtain exact data. When estimates are used, they
should be presented as such in a manner so as to avoid the implication of greater accuracy than exists.
The member should be satisfied the estimated amounts are reasonable under the circumstances.
1
1.210 (October 87)
8. In preparing a tax return, a member ordinarily may rely on information furnished by his client
provided that the information appears reasonable. Although the examination or review of documents
or other evidence in support of the client's information is not required, the member should encourage
his client to provide such supporting data, where appropriate.
In addition, the member:
(a) should make use of his client's returns for prior years whenever feasible.
(b) is required to make reasonable inquiries where the information presented appears to be
incorrect or incomplete.
9. The member's responsibility when he learns of a material error or omission in a client's tax return of a
prior year (with which he may or may not have been associated), or of the failure of a client to file a
required tax return, is as follows:
(a) He should promptly advise his client of the error or omission and recommend that the client
make disclosure to the Inland Revenue Department. Normally, the member is not obligated to
inform the Inland Revenue Department, nor may he do so without his client's permission.
(b) If the client does not correct the error:
(i) the member should inform the client that he cannot act for him in connection with that
return or other related information submitted to the authorities;
(ii) the member should consider whether continued association with the client in any
capacity is consistent with his professional responsibilities;
(iii) and if the member concludes that he can continue with his professional relationships
with the client, he should take all reasonable steps to assure himself that the error is
not repeated in subsequent tax returns.
(c) If because of the error or omission, the member ceases to act for the client, in these
circumstances, the member should advise the client of the position before informing the
authorities of his having ceased to act and should give no further information to the authorities
without the consent of the client, unless required to do so by law.

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1.

210 (October 87)

(Issued October 1987)

DEVELOPMENT OF THE FUNDAMENTAL PRINCIPLES

(a) contains a false or misleading statement;

In addition, the member:

(b) If the client does not correct the error:

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