PCRT: the standards for tax planning

Professional Conduct in Relation to Taxation (PCRT), effective from 1 January 2026, sets five Standards for Tax Planning that sit on top of the five fundamental principles: client specific, lawful, disclosure and transparency, advising on tax planning arrangements, and professional judgement and appropriate documentation. A member must not create, encourage or promote arrangements that set out to achieve results contrary to the clear intention of Parliament, or that are highly artificial or highly contrived and exploit shortcomings in the legislation. Where a client wants to pursue planning the member believes lacks a credible basis, the member must explain why, advise against it and consider withdrawing.

Who has to follow the Standards for Tax Planning?

PCRT is produced jointly by AAT, ACCA, ATT, CIOT, ICAEW, ICAS and STEP, and was last revised with effect from 1 January 2026. Paragraph 1.7 applies it to every member who practises in tax, including members in practice, employees dealing with their employer’s or a client’s tax, people dealing with the tax affairs of family, friends or charities whether or not for payment, and staff of HMRC and other public bodies. “Member” includes students and affiliates and, where the context requires, the firm and its staff. A failure to follow PCRT can lead to disciplinary action.

HMRC acknowledges PCRT as an acceptable basis for dealings between members and HMRC, and section 4.4 of the HMRC standard for agents closely mirrors the lawful, disclosure, arrangements and documentation standards, so non members are held to much the same test. For the wider framework see PCRT explained; this page concentrates on the planning standards.

What do the five Standards require?

Standard	What it requires
Client specific	Planning must fit the particular client’s facts. The member must understand the client, its owners and management, the purpose and facts of the arrangement and the relevant law, and must alert the client to wider risks and implications.
Lawful	Act lawfully and with integrity, advise clients to comply with tax law, draw attention to anti avoidance rules, and base planning on a realistic assessment of the facts and a credible view of the law, together a “credible basis”.
Disclosure and transparency	Advice must not rely for its effectiveness on HMRC having less than the relevant facts, and any disclosure must fairly represent all relevant facts.
Advising on tax planning arrangements	Do not create, encourage or promote arrangements contrary to the clear intention of Parliament, or highly artificial or highly contrived arrangements that exploit shortcomings in the legislation.
Professional judgement and appropriate documentation	Keep timely notes of the reasoning behind judgements, and consider the reputational, commercial and wider economic consequences of how stakeholders might view the arrangement.

What makes advice client specific?

Paragraph 3.3 limits the risks the member must flag to those directly attributable to the planning and reasonably foreseeable; there is not normally a duty to comment on the commercial risk of the underlying transaction. Paragraph 3.5 warns that generic advice, which does not take account of a specific taxpayer or a narrowly defined group, carries particular risk. Members may make reasonable assumptions, such as UK residence, but must not rely on assumptions known to be unrealistic, and where advice is generic or assumption based they must say so prominently and state that specific advice is needed before acting. A newsletter article or a seminar slide is generic; a recommendation to a named client is not.

What counts as a credible basis?

The lawful standard requires both a realistic view of the facts and a credible view of the law. Where the law is materially uncertain, including where HMRC is known to take a different view, the member must say so. Paragraph 3.6 makes clear this applies even if HMRC is considered unlikely to look at the point, and that the client should be told what it would be reasonable to expect HMRC to believe the law to be, assuming HMRC knew all the facts. Disagreeing with HMRC is not itself a breach (paragraph 3.7), but the client must be told that HMRC holds a different view and the risks and likely costs of a dispute. The member must reassess the advice if new circumstances come to light during the engagement, and should consider further advice where litigation is likely or the work is outside their expertise.

When must a member refuse to help?

There are three distinct points at which a member must decline or step back.

• Evasion. A member must never be knowingly involved in tax evasion, though acting for a client who is putting their affairs right is appropriate. Under paragraph 2.26, where proposed arrangements are or may be evasion, the member must strongly advise the client not to proceed, and if the client ignores that advice it is difficult to see how the member could continue to act other than to rectify the position.
• Prohibited arrangements. The member must not create, encourage or promote an arrangement caught by the fourth standard, even if the client is willing to take the risk. This applies equally to reviewing or implementing a scheme designed by someone else, and PCRT applies when a member is asked for a second opinion on an arrangement (paragraph 2.15).
• No credible basis. Under paragraph 3.8, the member must tell the client the basis of their assessment, explain the potential consequences and advise the client not to pursue it.

Separately, if after weighing reputational, commercial and wider economic consequences a member decides not to advise on an arrangement the client wants, the member must tell the client and explain why.

Where there is genuine and reasonable uncertainty whether planning breaches the fourth standard, paragraph 3.12 requires the member to discuss the uncertainty with the client, document the reasoning and evidence, include an assessment of the uncertainties and risks in the advice, and assess what should be disclosed to HMRC so it can make reasonable enquiries.

What if the client goes ahead anyway?

If a client pursues an arrangement the member considers lacks a credible basis, paragraph 3.9 requires the member to advise the client to tell the appropriate level of management internally about the arrangement and the difference of views, to consider full disclosure to HMRC where that is not already required, and to consider telling the external auditor. Paragraph 3.10 then requires the member to consider whether to withdraw from the engagement and the relationship; an employed member may need to consider resigning. Withdrawal should be handled through a proper disengagement letter.

What must be disclosed about third party schemes and commission?

If a client asks a member to advise on an arrangement designed by a third party, or the member refers a client to a third party provider of tax planning, the member must tell the client of any professional or business relationship with that provider (paragraphs 2.7 and 2.8). Paragraph 2.9 requires the member to disclose any commission, incentive or other advantage from a third party relating to the advice, and the amount or the basis of calculation. These rules sit alongside the statutory regimes, so also consider DOTAS, the general anti abuse rule and the rules on enablers of defeated tax avoidance.

How might this work in a real case?

Illustration only. A company director brings an adviser a brochure for an arrangement that pays her through a series of loans from an offshore trust, promising that the money will never be taxed. The adviser has an introducer agreement with the promoter.

1. The adviser discloses the introducer agreement and any commission (paragraphs 2.8 and 2.9).
2. The adviser concludes the arrangement is highly contrived and aims to defeat the intention of the employment income rules, so it falls within the fourth standard and cannot be recommended.
3. The adviser writes to the client explaining that conclusion, the risk of challenge and the costs involved, and advises her not to proceed.
4. The client proceeds anyway. The adviser advises her to consider full disclosure to HMRC, records the reasoning on file and decides to withdraw from that engagement.

Contrast a director choosing between salary and dividends, or making an employer pension contribution: these use reliefs as Parliament intended and raise no issue under the fourth standard, although the advice must still be client specific.

What does good documentation look like?

Paragraph 3.13 says members are not required to complete paperwork for its own sake, but must be ready to identify, support and defend their judgements. Paragraph 3.14 says notes made at the time are likely to be the most convincing evidence of compliance. A short file note should record the client’s commercial aims, the facts relied on, the view of the law and any known HMRC view, the risks explained, any disclosure recommended and, where relevant, why the member declined. Common failings are giving generic advice to a client without flagging it as such, relying on a promoter’s opinion without forming an independent view, and recording reasoning months later once an enquiry has begun.

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Related Accountapedia entries

• The HMRC standard for agents
• When a client will not correct a tax error
• Professional indemnity claims arising from tax advice
• Giving second opinions
• CIOT and ATT professional rules
• HMRC non statutory clearances

Sources

• ICAEW: Pcrt effective 1 january 2026
• GOV.UK: The hmrc standard for agents

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.