ACCA Advanced Taxation (ATX) Practice Exam

What occurs if a client refuses to disclose income to HMRC?

1. The adviser must comply regardless of the client's wishes

2. The adviser can continue acting without issues

3. The adviser must cease to act for the client

4. The adviser can report to HMRC without consequence

The correct answer is: The adviser must cease to act for the client

If a client refuses to disclose income to HMRC, the best course of action for the adviser is to cease to act for that client. This is because the adviser has a professional and legal obligation to ensure that all tax-related matters are handled transparently and in compliance with the law. Continuing to represent a client who is intent on evading tax obligations could lead to serious consequences for the adviser, including potential liability for enabling tax evasion. The refusal to disclose income is a significant breach of trust and indicates that the client may be engaging in unethical or illegal behavior. By ceasing to act, the adviser protects themselves from being implicated in that behavior. This decision also aligns with ethical guidelines set forth by professional bodies which emphasize integrity and compliance with laws. Maintaining the adviser-client relationship under such circumstances could compromise the adviser’s professional standards and possibly lead to disciplinary action. Hence, it is imperative for the adviser to withdraw from the case if a client refuses to comply with statutory requirements.