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ICAEW BUSINESS PLANNING: TAXATION (BPT) NEWEST UPDATED EXAM 2026 – 2027
SOLVED QUESTIONS & ANSWERS VERIFIED 100% GRADED A+ (LATEST VERSION)
Question 1
You are a tax adviser preparing a planning report for a client. The client suggests a
scheme that is legal but appears to exploit a loophole contrary to the spirit of the
law. Under the ICAEW Code of Ethics and Professional Conduct in Relation to
Taxation (PCRT), what is your primary professional obligation?
A. Implement the scheme exactly as instructed without question
B. Advise the client on the technical position and clearly explain the ethical and
reputational risks, declining to act if the scheme is abusive
C. Report the client to HMRC immediately
D. Refuse to speak to the client again
Correct Answer: B
Rationale: PCRT requires advisers to act with integrity and to advise on the spirit of the
law, not merely the letter. You must explain the risks and can decline to act if the
arrangement is abusive, rather than simply following instructions or making an
immediate report without discussion.
Question 2
A client asks you to backdate a document to support a tax claim. What is the
correct response under professional ethics?
A. Comply, as the client is ultimately responsible
B. Refuse, as backdating a document constitutes dishonesty and a breach of integrity
C. Comply but note your concerns in the file
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D. Report the client to the police
Correct Answer: B
Rationale: Backdating is dishonest and breaches the fundamental principle of integrity.
You must refuse, and you should consider whether to continue acting for the client.
Question 3
Under the PCRT, when may a tax adviser disclose client information to HMRC
without the client’s consent?
A. Never
B. Only when compelled by law or when there is a legal obligation (e.g., money
laundering reporting)
C. Whenever the adviser believes it is helpful
D. Only if the client is a company
Correct Answer: B
Rationale: Confidentiality is a core duty, but disclosure can occur where compelled by
law (e.g., AML reporting) or where there is a legal obligation.
Question 4
A client proposes a transaction whose sole purpose is to obtain a tax advantage,
with no commercial substance. Which concept is most relevant to your advice?
A. The General Anti-Abuse Rule (GAAR)
B. Capital allowances
C. The annual investment allowance
D. Loss relief
Correct Answer: A
Rationale: The GAAR targets abusive arrangements whose main purpose is to obtain a
tax advantage contrary to the intent of Parliament. You must advise on the GAAR risk.
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Question 5
You discover that a client has understated income in a previously filed return.
Under PCRT, what is the expected course of action?
A. Ignore it because the return is already filed
B. Advise the client to make a full disclosure and correct the position, and cease to act if
the client refuses
C. Amend the return without telling the client
D. Report the client immediately to HMRC without discussion
Correct Answer: B
Rationale: PCRT requires you to advise the client to correct errors and make full
disclosure. If the client refuses, you should cease to act and consider whether reporting
is required.
Question 6
Which of the following best describes the purpose of the Disclosure of Tax
Avoidance Schemes (DOTAS) regime?
A. To reward taxpayers who use avoidance schemes
B. To require promoters and users of certain avoidance schemes to disclose them to
HMRC
C. To replace the GAAR
D. To provide tax relief for scheme users
Correct Answer: B
Rationale: DOTAS requires promoters (and in some cases users) to disclose specified
avoidance schemes to HMRC, enabling HMRC to challenge them.
Question 7
A client asks you to act where there is a conflict of interest between two parties to a
transaction. What should you do?
A. Act for both parties without disclosure
B. Disclose the conflict and obtain informed consent, or decline to act for one or both
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parties if the conflict cannot be managed
C. Act only for the party who pays more
D. Ignore the conflict
Correct Answer: B
Rationale: Conflicts of interest must be identified, disclosed, and managed. If they
cannot be managed with informed consent, you should decline to act.
Question 8
Under the money laundering regulations, what is your primary obligation if you
suspect money laundering?
A. Tell the client immediately
B. Make a suspicious activity report (SAR) to the National Crime Agency and avoid
tipping off the client
C. Ignore the suspicion
D. Report the client to HMRC
Correct Answer: B
Rationale: You must make a SAR to the NCA and must not tip off the client, as tipping
off is a criminal offence.
Question 9
A client asks for advice on a transaction that is not illegal but is aggressive tax
planning. What is the appropriate professional approach?
A. Refuse to advise entirely
B. Provide balanced advice on the technical position, the risks (including GAAR and
reputational risk), and the client’s responsibilities
C. Advise only on the tax savings
D. Guarantee that HMRC will accept the position
Correct Answer: B
Rationale: You should provide balanced advice covering the technical position, risks,
and the client’s responsibilities, rather than refusing outright or guaranteeing outcomes.
ICAEW BUSINESS PLANNING: TAXATION (BPT) NEWEST UPDATED EXAM 2026 – 2027
SOLVED QUESTIONS & ANSWERS VERIFIED 100% GRADED A+ (LATEST VERSION)
Question 1
You are a tax adviser preparing a planning report for a client. The client suggests a
scheme that is legal but appears to exploit a loophole contrary to the spirit of the
law. Under the ICAEW Code of Ethics and Professional Conduct in Relation to
Taxation (PCRT), what is your primary professional obligation?
A. Implement the scheme exactly as instructed without question
B. Advise the client on the technical position and clearly explain the ethical and
reputational risks, declining to act if the scheme is abusive
C. Report the client to HMRC immediately
D. Refuse to speak to the client again
Correct Answer: B
Rationale: PCRT requires advisers to act with integrity and to advise on the spirit of the
law, not merely the letter. You must explain the risks and can decline to act if the
arrangement is abusive, rather than simply following instructions or making an
immediate report without discussion.
Question 2
A client asks you to backdate a document to support a tax claim. What is the
correct response under professional ethics?
A. Comply, as the client is ultimately responsible
B. Refuse, as backdating a document constitutes dishonesty and a breach of integrity
C. Comply but note your concerns in the file
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D. Report the client to the police
Correct Answer: B
Rationale: Backdating is dishonest and breaches the fundamental principle of integrity.
You must refuse, and you should consider whether to continue acting for the client.
Question 3
Under the PCRT, when may a tax adviser disclose client information to HMRC
without the client’s consent?
A. Never
B. Only when compelled by law or when there is a legal obligation (e.g., money
laundering reporting)
C. Whenever the adviser believes it is helpful
D. Only if the client is a company
Correct Answer: B
Rationale: Confidentiality is a core duty, but disclosure can occur where compelled by
law (e.g., AML reporting) or where there is a legal obligation.
Question 4
A client proposes a transaction whose sole purpose is to obtain a tax advantage,
with no commercial substance. Which concept is most relevant to your advice?
A. The General Anti-Abuse Rule (GAAR)
B. Capital allowances
C. The annual investment allowance
D. Loss relief
Correct Answer: A
Rationale: The GAAR targets abusive arrangements whose main purpose is to obtain a
tax advantage contrary to the intent of Parliament. You must advise on the GAAR risk.
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Question 5
You discover that a client has understated income in a previously filed return.
Under PCRT, what is the expected course of action?
A. Ignore it because the return is already filed
B. Advise the client to make a full disclosure and correct the position, and cease to act if
the client refuses
C. Amend the return without telling the client
D. Report the client immediately to HMRC without discussion
Correct Answer: B
Rationale: PCRT requires you to advise the client to correct errors and make full
disclosure. If the client refuses, you should cease to act and consider whether reporting
is required.
Question 6
Which of the following best describes the purpose of the Disclosure of Tax
Avoidance Schemes (DOTAS) regime?
A. To reward taxpayers who use avoidance schemes
B. To require promoters and users of certain avoidance schemes to disclose them to
HMRC
C. To replace the GAAR
D. To provide tax relief for scheme users
Correct Answer: B
Rationale: DOTAS requires promoters (and in some cases users) to disclose specified
avoidance schemes to HMRC, enabling HMRC to challenge them.
Question 7
A client asks you to act where there is a conflict of interest between two parties to a
transaction. What should you do?
A. Act for both parties without disclosure
B. Disclose the conflict and obtain informed consent, or decline to act for one or both
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parties if the conflict cannot be managed
C. Act only for the party who pays more
D. Ignore the conflict
Correct Answer: B
Rationale: Conflicts of interest must be identified, disclosed, and managed. If they
cannot be managed with informed consent, you should decline to act.
Question 8
Under the money laundering regulations, what is your primary obligation if you
suspect money laundering?
A. Tell the client immediately
B. Make a suspicious activity report (SAR) to the National Crime Agency and avoid
tipping off the client
C. Ignore the suspicion
D. Report the client to HMRC
Correct Answer: B
Rationale: You must make a SAR to the NCA and must not tip off the client, as tipping
off is a criminal offence.
Question 9
A client asks for advice on a transaction that is not illegal but is aggressive tax
planning. What is the appropriate professional approach?
A. Refuse to advise entirely
B. Provide balanced advice on the technical position, the risks (including GAAR and
reputational risk), and the client’s responsibilities
C. Advise only on the tax savings
D. Guarantee that HMRC will accept the position
Correct Answer: B
Rationale: You should provide balanced advice covering the technical position, risks,
and the client’s responsibilities, rather than refusing outright or guaranteeing outcomes.
