Accountants should take a Hippocratic Oath

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Accountants should make a similar ethical standard pledge to the medical profession, according to Labour’s shadow chancellor John McDonnell, who has called on large firms to force their employees to take a Hippocratic Oath. 

McDonnell aimed his ire at the Big Four, who he believes are not doing enough to tackle tax avoidance. Speaking at the World Economic Forum in Davos last week, McDonnell told the BBC that the Big Four must change their “entire ethos”.

"I think we need a new Hippocratic Oath for [the accountancy firms], where they sign up to being committed to tackling tax avoidance themselves, rather than coming up with all these bizarre schemes to enable that to happen," McDonnell said.

He added that the public is tired of seeing “increasingly complex schemes being cooked up by accountancy firms with a direct interest in obscuring and hiding the earnings of their clients”.

McDonnell has consistently opposed tax avoidance throughout his tenure as shadow chancellor. In the party’s 2017 general election manifesto, McDonnell said a Labour government would pledge £6.5bn towards a tax avoidance programme and another area of the party’s manifesto that garnered attention was its vow to outlaw umbrella companies.  

‘Hippocratic Oath is the wrong request’

But some corners of the profession diagnosed McDonnell's proposal as absurd. “Almost no doctor has ever taken the Hippocratic Oath,” accountant and tax campaigner Richard Murphy told AccountingWEB. "It's the wrong request."

As the husband of a GP, Murphy attests that while no doctor has signed up to a Hippocratic Oath they are heavily regulated, removing the need for such a pledge. However, what is required in the case of the accountancy profession, Murphy added, is a partnership between the taxpayer, their agent and government to make tax compliance easier.

“The government has a duty to make it as easy as possible for the taxpayer to be compliant and I don't think it always does that, and I think that requires a review of the tax system, including simplification which so far we are not seeing.”   

Professional bodies react

While McDonnell wants large firms swearing to the accounting equivalent of Apollo the healer, ICAEW’s chief executive Michael Izza reasoned that such ethical standards have been a “central pillar” in the profession since accountants were granted their Royal Charter nearly 140 years ago.

Responding to McDonnell’s comments in City AM the ICAEW chief wrote: “In addition to being subject to legal requirements, chartered accountants and members of other professional accountancy bodies are also required to follow a professional code of ethics.”

In particular, Izza highlighted how members of the seven professional bodies must already abide by the Professional Conduct in Relation to Tax (PCRT), which HMRC recently used as a framework for its Standard for Agents. "This code, which enshrines fundamental principles like integrity and objectivity, is regularly updated to reflect changes both to the law and the expectations of society."

He concluded that McDonnell should first root out the wrong rather than "those who have been working hard to do what is right", pointing out that a third of registered tax advisers are not required to follow any ethical or professional standards because they are not members of any professional body.

Professional bodies must do more

But for Murphy, Izza’s PCRT response to McDonnell “missed the point”. For a code of conduct within the profession to work it requires a serious change of view from the professional bodies, he said.

“There is no doubt that over the years many firms of accountants have run into trouble, not always in the UK but worldwide, with regards to their professional ethics on tax.

“Many UK-based firms are operating in tax havens where frankly the question arises what they are doing there, why they're there, what it is their clients may be trying to achieve by being there, and whether that activity is consistent with paying the right amount of tax at the right place and at the right time.” 

McDonnell should be focussing on where advisers create risk for their clients, Murphy said, not sensible tax planning that is fair and square with the law. "The accountant's job is to actually present a fair minimum risk to their clients. That to me is the equivalent of 'do no harm'.

“By all means mitigate tax liability within the law, but don't create tax risk. I am aware that schemes are not nearly as prevalent as they were - but there are still arrangements being sold, and an accountant should not be involved in doing that.”

While there is always going to be a risk, Murphy said, advisers should have at least an 85% to 90% belief that their advice is “absolutely watertight that it is going to survive challenge”.

“This clearly changes the balance of judgement,” he said. “It tilts the whole arrangement that suggests the balance of probabilities have to be heavily in favour of likely to be compliant.”

About Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

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03rd Feb 2018 12:41

As a practising accountant, I would be quite happy to do that. But all politicians should be required to take a similar oath : promising to put their constituents and the country before self and tribal loyalties.

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By Helennw
to sammerchant
04th Feb 2018 09:51

I think the issue is not about taking oath or not. The ethical required to accountant and training we go through is sufficient.
the issue is rather behaviour once accountants have been in the job. it is about complaceny. I reckon the big four reach certain point where the can't control the sittuation and they will always be that human behavour. Maybe there need to be a cut off point and take on clients they can do the job properly.

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to Helennw
05th Feb 2018 10:43

Lovely jubly

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By Myshkin
02nd Feb 2018 10:13

What has the profession come to that this suggestion is even being made? The old school accountants who practised ethics as part of the job will be turning in their graves.

I would say it is time to put our house in order - except it is far too late.

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02nd Feb 2018 10:18

Have to agree with Michael Izza, McDonnell is talking utter rubbish given that we already swear the accounting equivalent of the Hippocratic Oath and that the main difference between the medical and accounting professions is that doctors need to be qualified before being allowed to practice.

This of course is a law and therefore within the remit of politicians to change, but he hasn't seen fit to address it in any way because his attack, while framed as an attack on the profession, is in fact an attack on big business.

If his concern was really about the ethical standards in accountancy then he would first address the issue that most of the regulatory framework in the profession is on an opt in basis rather than mandatory.

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02nd Feb 2018 10:26

Hippocratic Oath = Uphold specific ethical standards.

Chartered Accountants do.

I guess he is not proposing to privatise HMRC to the private sector so he is proposing that the profession do HMRC's job for them.

It's about time ICAEW etc start standing up and fighting for the profession in a more robust way.

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to North East Accountant
02nd Feb 2018 16:50

North East Accountant

All the fraudulent activities I have witnessed have been signed off by a member of a top accountancy body.

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to North East Accountant
02nd Feb 2018 16:50

North East Accountant

All the fraudulent activities I have witnessed have been signed off by a member of a top accountancy body.

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02nd Feb 2018 10:36

Why have you become a mouthpiece for Murphy? Do you pay him?

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02nd Feb 2018 10:39

A Very good article which raises many points.
One of the main areas that needs looking at is "employment status". My view is that this should be a commercial decision and that HMRC should keep their noses out. You only have to look at IR35. Taking away Limited Company status in order to raise more tax. Ludicrous.
I'm 100% sure that if HMRC kept their noses out of employment status many "tax avoidance schemes" would go.
I don't think you can ever stop multinationals doing what they want so you either negotiate with them or charge them a "sales tax" (of course you would have to define sales, but that wouldn't be too difficult).
Whilst training to be an Accountant, ethics becomes the norm. It's built in. Yes of course there are rogues. Some end up rich, some get banged up. This is the case in all walks of life.
So John, take the plank out of your own eye before you seek to take the splinter out of ours.

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02nd Feb 2018 10:43

As an accountant my primary duty is my client not to the state.

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By Pygmy
to BSSRoberts
02nd Feb 2018 11:53

I remember from my AAT Ethics module that we are expected to treat HMRC in a fair and even-handed way; I am still waiting for the client who would even understand that concept....

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to BSSRoberts
02nd Feb 2018 18:18

Duty is to the honest client.

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to BSSRoberts
02nd Feb 2018 18:18

Duty is to the honest client.

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02nd Feb 2018 10:46

Oh John just as a note.
Directors paying themselves megabucks intead of paying into a pension scheme is nothing to do with Accountants.
The NHS having to pay £1500 for a £2 pot of cream is nothing to do with Accountants.
Banks selling PPI is nothing to do with Accountants.
Etc. etc. etc.

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02nd Feb 2018 10:54

Since 1972 in a handful of private commercial undertakings I have witnessed substantive fraud - accounting fraud executed by the business owners, accounting frauds where the agent /auditor has been complicit and blatant fraud executed solely by the ' big boys' audit firm.
It's shocking in my opinion that ' the turn a blind eye syndrome ' exists on such a grand scale.
When I worked with the Special Compliance HMIT team as witness for the prosecution on irregularities of £ 1 million in a family business by the precedent acting partner I was amazed the auditor who knew of the frauds appointed ' big boy ' tax specialists as though they could defend them.
Accountancy needs to get clean . It's no good being a well read whizz kid accountant if the accounts are riddled with fraud.
The tax I gained for HMIT paid for 16 nurses. Honesty must prevail as we approach left of centre social democratic governance.

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to SNOOPDOG
02nd Feb 2018 11:08

In some ways I have to agree. However when HMRC get greedy and try to manipulate the law, or interpret to suit and tell blatant lies (MTD will stop mistakes, umpteen billion tax gap, why is it Parliament always get their figures wrong?etc.) themselves, then some will fight back.
As someone stated it is time for a proper partnership with agreed ground rules. I always thought that Agent Strategy would do just that - now look.

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to SNOOPDOG
02nd Feb 2018 11:15

Just out of curiosity and not really anything to do with the original post, given the fact that for several years, the EU's accounts have NOT been signed off by the auditors because of unexplainable irregularities, yet, there are very many companies (public and private) whose accounts ARE signed off and later found to be somewhat fraudulent and worthy of civil or criminal investigation, do you think this indicates that the bureaucrats in charge of the EU's accounts and the EU's accountants should be hauled up before some sort of "Grand Jury" and made to explain the irregularities?

Does this alone not indicate that the 17.4 million Brexit voters were correct to not want to be part of such an apparently fraudulent entity?

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to Wiganer Elaine
02nd Feb 2018 11:31

[quote=Wiganer Elaine]

Just out of curiosity and not really anything to do with the original post, given the fact that for several years, the EU's accounts have NOT been signed off by the auditors because of unexplainable irregularities, "
This is not true.
The auditors have given a clean audit opinion on the EU Budget every year since 2007.
Please see this Full Fact answer:
https://fullfact.org/europe/did-auditors-sign-eu-budget/

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to Rebecca Cave
02nd Feb 2018 12:32

Thanks for that reference - from it you will see that for the past 22 years (that is EVERY year since 1994) the Court of Auditors gave an ADVERSE opinion on the issue of whether the payments made by the EU were free from significant errors until 2016, when finally it gave a QUALIFIED opinion that "A significant part of the 2016 expenditure was not affected by a material level of error".
You couldn't make it up.
Just imagine if KPMG had signed off the Carillion audit using that phraseology, but then, the EU make the rules, different ones for them and different ones for us!
The sooner we're rid of them the better.

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By Mike18
to Philipbwood
03rd Feb 2018 15:48

Tired of hearing the European Union for everything and this is an especially blatant example. The records and submissions of member states running EU programmes are the source of the 'errors', UK amongst them. When we are 'rid of them' the UK Government's waste can be blamed on........ ?

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02nd Feb 2018 10:53

Warning.
Don't read articles like this when having a cup of tea.
I almost choked and there is tea all over my desk.
"Let he who is without sin......"

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to leon0001
02nd Feb 2018 18:16

Of course all social economic protagonists need to be driven by probity and integrity.

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02nd Feb 2018 11:00

My understanding is that the really big tax avoidance schemes are operated by Barclays Bank.
Aggressive tax avoidance, of the sort that gets a scheme number and needs to be notified under DOTAS, is highly specialised, expensive , and strongly disliked by most accountants in practice. I am appalled by the ignorance on the subject in the media. I have even heard ISAs described as avoidance.
Mr McDonald needs to take care. I remeber reading years ago that certain legislation on capital allowances arose because of avoidance by nationalised industries.

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02nd Feb 2018 11:09

Indeed - it's not as if many polyingticiunts can even fill in an expense claim form correctly themselves.

Sounds more of a Hypocritic Oath in an attempt to say something whilst doing nothing of any real importance, as usual.

If they stopped meddling, half of these 'problem' areas would become a non-issue anyway.

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02nd Feb 2018 11:16

"Old school accountants turning in their grave" - what a load of rubbish. All the old school accountants I came across (and there have been many) knew what their role was i.e. to look after the client first and ethics were a long way down the list of priorities. A few valued their professional reputation more that they valued the people who paid them i.e. but they rarely flourished as their reputation as being the "taxman's friend.

I believe that it is our responsibility to represent our clients best interests, whilst at the same time observing the law. It is the politicians responsibility to pass the appropriate legislation in a manner which is effective and reflects the "will of parliament" and is "fair". If they can't do that then we advise clients of the opportunities which are available.

With regard to the politicians themselves we have always had a ruling eilte, whether they describe themselves as left wing, right wing or whatever who are all as bad as each other. They only care for themselves and do what they can to line their own pockets and those around them. I for one will take absolutely no notice of their views as they reflect on the accountancy profession until they put thier own house in order.

With regard to Mr McDonnell I propose that we adopt the principle that no man under 5 foot 6 inches should be allowed to stand for office and that will see him off!

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By KatySS
02nd Feb 2018 11:38

Why have Tax havens in the first place, if the government is going to complain it?
Oh and what about the Bankers? Surely they should be doing the same.

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02nd Feb 2018 12:17

The only hypocrite here is John McDonnell as far as I can see.
How about starting with a level playing field?

1 Restrict the name "Accountant" to those with an acceptable professional qualification
2 Remove the professional privilege that lawyers have (or would you rather continue to facilitate fraud and deceit - see the recent decision in Re Lemos)

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to Philipbwood
02nd Feb 2018 17:07

It's not about the binary of qualified/non qualified surely it's about the honest/dishonest.
The ' turn a blind eye syndrome"
Why would an agent who renders a fee note to his client for £6000 rock the boat.?

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02nd Feb 2018 13:14

It's high time we had a professional register so that only suitably qualified ATT/CTA can act as tax advisers (supervision for trainees whilst they qualify). Anything else just drags down the quality of advice given. Accountants could give tax advice if overseen by a CTA somewhere in the chain.
Or perhaps a minimum standards test for anyone who is not ATT/CTA qualified (set by the CIOT, NOT HMRC).
We're bound by our Institute's codes, so as usual McDonnell is soundbiting and firing wide of the mark.
His suggestion at Davos was apparently that accountants should seek to maximise their client's tax liabilities, which shows just how dangerously deluded he is- and yet people will still vote Labour.

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to Ian McTernan CTA
02nd Feb 2018 13:32

IFA's have to pass exams to give advice so I see no problem in the non qualifieds having to take some sort of exam also.
I remember giving advice on pensions about 25 years ago. Although I still know most of what an IFA knows I'm not allowed to give advice anymore, unless I sit the exams (too time consuming).
This would have to be brought in over a period of time.
I don't think that non quals advice "drags down the quality". If a non qualified has the experience of many scenarios, I'm sure their advice would be just as good as any qualifieds.

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to Ian McTernan CTA
02nd Feb 2018 17:15

You are taking the wrong trajectory. It's nothing to do with qualified / non qualified it's about honesty versus dishonesty trust me.
Many intelligent people are not assigned to professional bodies

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02nd Feb 2018 13:58

So shadow man McDonnell has aimed his ire at the Big 4.
Equally, he could have aimed at his M.P. colleagues with their bastardised expenses claims.
Who / What will be the next bag of wind spouting forth the Gospel according to Saint Matthew, with the usual sod all following.
All hypocritical bull####

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02nd Feb 2018 14:54

Having nothing else better to do after 31 Jan... I checked the GMC site for a modern form of Oath and found this:

"You must provide a good standard of practice and care. If you assess, diagnose or treat patients, you must:

a. adequately assess the patient’s conditions, taking account of their history (including the symptoms and psychological, spiritual, social and cultural factors), their views and values; where necessary, examine the patient

b. promptly provide or arrange suitable advice, investigations or treatment where necessary"

>>>which is arguably what these accountants who think up these tax avoidance schemes could be said to be doing... they assess their clients, "their views and values" and decide what is good for them - they are looking after their clients interests (and no... I'm not saying these schemes are right but just making a point.)

As pygmy and johnjenkins point out all professional accounting and many other business Institutes have a paper for Ethics and have a Code of Ethics.
If members of those Institutes do not adhere then they can face disciplinary action.

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to Jennifer Adams
03rd Feb 2018 16:09

So what happened to "First do no harm"?

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02nd Feb 2018 15:21

Trust me it's not about competency it's about simple plain honesty.
I could enumerate here a plethora of frauds I have witnessed but I would be inscribing here until Xmas.
When accountants submit accounts with a profit showing £250000. And the true profit is £500000 the Treasury has lost tax on £250000
Neoliberalism right wing capitalism has had its unfettered run trust me.
Accountancy has to raise its head in preparedness for social democracy and regulation of both directors and agents.
Austerity and the retrenchment of the welfare state is a bankrupt policy
WE need a register of honest accountants based on the interaction of the accountant and the Inspector.
The new accountable era is approaching under the umbrella of social democracy. Be aware.

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to SNOOPDOG
02nd Feb 2018 16:20

Perhaps the true profit of £500000 didn't incorporate the £250000 bad Carillion Debt.
Whilst I agree there is fraud, let's take a look at the lies some Inspectors come out with. I'm sure many of us could enumerate a plethora of lies.
The point I am making is who chooses the "honest" Accountant and Inspectors?
I agree a new era is approaching but it has to be based on mutual respect and agreement. We are a long way off that position.
TM will, in the next few months as she is negotiating with the EU, understand just what we have to put up with when we deal with HMRC.

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02nd Feb 2018 15:12

I love McDonnells burgers with large fries

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02nd Feb 2018 15:12

I love McDonnells burgers with large fries

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02nd Feb 2018 15:18

Another fraud - how " the big boys whiz kids' word their fee notes in order to reduce tax liability.

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02nd Feb 2018 16:11

As usual, Mr. McDonnell is incapable of basing his statements on facts; doctors haven't sworn the Hippocratic oath for many years. He would be best answered by asking when will politicians have standards? Perhaps telling the truth or doing what you promise before the election would be a good start?

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02nd Feb 2018 16:12

As usual, Mr. McDonnell is incapable of basing his statements on facts; doctors haven't sworn the Hippocratic oath for many years. He would be best answered by asking when will politicians have standards? Perhaps telling the truth or doing what you promise before the election would be a good start?

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02nd Feb 2018 17:21

I once had a musician client. It was obvious he was on the fiddle.
I said to my butcher client " your cash account does not balance". He gave me the chop
I had an optician client but we never saw eye to eye.

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02nd Feb 2018 17:22

I once had a musician client. It was obvious he was on the fiddle.
I said to my butcher client " your cash account does not balance". He gave me the chop
I had an optician client but we never saw eye to eye.

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By mabzden
to SNOOPDOG
03rd Feb 2018 11:42

Snoopy, you only need to click the "Post reply" button once...

If you double-click you may find all your posts are repeated...

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to mabzden
03rd Feb 2018 12:31

Double entry principles dude

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By mabzden
to SNOOPDOG
03rd Feb 2018 12:43

Good point ;-)

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By mabzden
to SNOOPDOG
03rd Feb 2018 12:43

Good point ;-)

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03rd Feb 2018 13:24

If my posts appear in duplicate its because of the double entry principle.

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03rd Feb 2018 16:09

I once had a dentist client. Incomplete records.
I had to fill too many gaps .

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