Professional Ethics, Confidentiality and Responsibilities of the Tax Consultant
This domain tests the standards expected of a tax consultant: competence, integrity, objectivity, confidentiality, conflict management and responsibility to the client, the tax administration and the profession.
Core rules
- A consultant must act within the law, maintain professional competence, and avoid signing or submitting returns containing known false statements. Advising on a defensible position is permitted; assisting evasion is not.
- Confidentiality covers client data, tax positions, financial records and settlement discussions. Disclosure is permitted with client consent, when required by law, or when responding to a valid court or tax authority order.
- Conflicts of interest must be identified and managed. A consultant should not represent two parties with opposing interests in the same matter without informed consent.
- Responsibilities include documenting advice, retaining working papers, meeting filing deadlines, correcting errors promptly and informing the client of material risks.
- Fees and engagement terms should be clear. A consultant should not promise a specific tax outcome or use improper influence.
Worked example
A client asks the consultant to deduct a family vacation as a business expense. The consultant refuses, explains the deductibility rule, documents the advice, and proposes a corrected return. If the client insists on the false deduction, the consultant should decline to sign and consider whether to continue the engagement. Confidentiality does not require the consultant to participate in a false filing.
Traps
Treating confidentiality as absolute when the law requires disclosure; ignoring conflicts; signing a return without reviewing support; failing to document oral advice; and confusing advocacy for the client with concealment of facts.