Question

Serena is a registered tax agent and has a number of long time clients, one of which is Cold Ice, a large ice-cream retailing franchise. Serena has a 30% ownership interest in Cold Ice.

Serena approached by Ice Cool, a rival ice-cream retailing franchise to provide tax agent services including tax planning work.

1. Identify the conflict of interest.

2. How can you manage conflicts of interest?

Answer 1

a. Serena holds 30% stake in Cold Ice and is one of her clients. She has been approached by Ice Cool a firm in the same industry for tax planning work which is a conflict of interest since acceptance of the work will directly affect the work of Cold Ice as they are in the same industry.

b. Conflicts of interest works must be avoided at all costs. However, if the tax practitioner believes that he/she can provide a unbiased opinion ,then the practitioner may give a written representation to all affected clients to waive the conflict to interest and if each one of the client waives its in written consent, the practitioner may accept the work.