ACCA Advanced Taxation (ATX) Practice Exam

What principle requires tax advisers to assess threats to compliance?

1. Professional integrity

2. Professional competence

3. Professional independence

4. Professional compliance

The correct answer is: Professional competence

The principle that requires tax advisers to assess threats to compliance is rooted in the concept of professional competence. This principle emphasizes the importance of having adequate knowledge, skill, and understanding of the relevant laws and regulations that govern taxation. Tax advisers must be well-versed in these aspects to identify potential threats to compliance effectively. By assessing threats to compliance, advisers can ensure that they provide services that adhere to legal requirements and ethical standards. This proactive approach is essential in maintaining the integrity of the tax system and helping clients avoid potential penalties or issues arising from non-compliance. Furthermore, the principle of professional competence not only involves technical skills but also the ability to recognize situational risks that may impact compliance. This ongoing assessment and vigilance are key responsibilities that professionals must undertake to uphold their duties within the taxation framework.