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  • Preventing involvement in tax avoidance schemes

    Your practice

    If your practice is based on any of these indicators of suspect schemes, then we recommend you revaluate how your approach to work.

    If you identify any of these indicators in your advisers, consider whether their approach to risk is consistent with your own and whether you are willing to bear the costs.

    Buying a practice

    When buying a new business from another entity, due diligence processes should include a focus on the risk appetite of the new business, their client base and relevant external advisers whom they use – in addition to assessing potential promoter-penalty risks from their association with controversial tax planning arrangements such as those questioned or challenged by the ATO.

    New associates

    When employing a new staff member care should be taken to identify and regularly review their attitudes towards risk so that it complements the approach taken by the practice.

    These areas of interest feed into the risk assessment of you and your adviser.

    Protecting your practice

    Internal controls are an effective way to strengthen your risk management strategy. Considering the following foundation areas of risk will help you deliver benefits to your practice:

    • marketing your tax advice services and tax products including the completeness and accuracy of informational content, coverage of marketing materials, processes, and the use of external intermediaries;
    • supervisory oversight of tax advice services for members of the firm or employees;
    • remuneration methods for tax advice services for members of the firm or employees, and a fee structure for products of the firm.

    Ask yourself whether a genuine and material financial benefit for your business apart from any effect on the group’s tax position exists. Does the scheme, viewed objectively, appear artificial or contrived?

    Last modified: 13 Sep 2016QC 50068