Abstract
Ethical dilemmas involving tax issues were identified by members of the American Institute of Certified Public Accountants as posing the most difficult ethical problem for them (Finn et al., Journal of Business Ethics 7(8), pp. 607–609, 1988). The KPMG tax shelter fraud case proves that the tax profession has not gone untainted in the age of numerous accounting and corporate scandals, such as the Enron débâcle (Sikka and Hampton, Accounting Forum 29(3), 325–343, 2005). High-profile scandals serve to highlight the problems caused by differences in ethical judgement among accountants and tax practitioners and the issue of ethics has been brought publicly to the forefront of the profession. Nevertheless, the nature and dimension of ethical issues in tax practice have been largely unexplored (Erard, Journal of Public Economics 52(2), 163–197, 1993; Marshall et al., Journal of Business Ethics 17(12), 1265–1279, 1998; Frecknall Hughes, Unpublished PhD Thesis, The University of Leeds, 2002). This research aims to contribute to the debate on ethics in tax practice by reporting interview data on tax practitioners’ perceptions of ethics in the jurisdictions of Ireland and the United Kingdom and exploring the link or equation of ethics with risk management.
Similar content being viewed by others
References
Bandy D. (1996). Limiting Tax Practice Liability. The CPA Journal, 66(5), 46–49
Beasley M., Jenkins J., & Sawyers R. (2006). Brainstorming to Identify and Manage Tax Risks. The Tax Advisor, 37(3), 158–162
Carnes G. A., Harwood G., & Sawyers R. (1996). The Determinants of Tax Professionals’ Aggressiveness in Ambiguous Situations. Advances in Taxation, 8, 1–26
Carroll J. (1987). Compliance with the Law. A Decision-Making Approach to Taxpaying. Law and Human Behavior, 11(4), 319–335. doi:10.1007/BF01044744
Christensen J., & Murphy R. (2004). The Social Irresponsibility of Corporate Tax Avoidance: Taking CSR to the Bottom Line. Development, 47(3), 37–44. doi:10.1057/palgrave.development.1100066
Cruz C. A., Shafer W. E., & Strawser J. R. (2000). A Multidimensional Analysis of Tax Practitioners’ Ethical Judgments. Journal of Business Ethics, 24(3), 223–244. doi:10.1023/A:1006140809998
Dox J. B. 1992. Ethical Issues in the Practice of Tax. In: W. S. Albrecht (ed) Ethical Issues in the Practice of Accounting. South-Western Publishing Co., Ohio, 71–77
Doyle D. (2001). Risk Management in Tax Practice: Part One. The Irish Tax Review, 14(6), 635–640
Doyle D. (2002). Risk Management in Tax Practice: Part 2. The Irish Tax Review, 15(4), 395–398
Eckstein K. (2004). Negligence Claims Against Tax Advisors. Irish Tax Review, 17(3), 241–244
Erard B. (1993). Taxation with Representation: An Analysis of the Role of Tax Practitioners in Tax Compliance. Journal of Public Economics, 52(2), 163–197. doi:10.1016/0047-2727(93)90019-P
Erlandson D. A., Harris E. L., Skipper B. L., & Allen S. D. 1993, Doing Naturalistic Inquiry: A Guide to Methods. Newbury Park, CA: Sage
Etzioni A. 1988, The Moral Dimension. (Free Press, New York)
Finn D. W., Chonko L. B., & Hunt S. D. (1988). Ethical Problems in Public Accounting: The View from the Top. Journal of Business Ethics, 7(8), 605–615. doi:10.1007/BF00382793
Fisher A. (1994). Finding the Right Tax Advisor. Fortune, 129(6), 77–80
Francis R., & Armstrong A. (2003). Ethics as a Risk Management Strategy: The Australian Experience. Journal of Business Ethics, 45(4), 375–385. doi:10.1023/A:1024163831371
Frecknall Hughes, J.: 2002, ‹An Empirical Investigation of the Share Valuation Work of Taxation Practitioners’, Unpublished PhD Thesis, The University of Leeds
Freedman J. (2004). Defining Taxpayer Responsibility: In Support of a General Anti-Avoidance Principle. British Tax Review, 4, 332–357
Hackenbrack K., & Nelson M. (1996). Auditors’ Incentives and Their Application of Financial Accounting Standards. Accounting Review, 71(1), 43–59
Hart, C.: 2000, ‹Risk Management for Accountants’, in A. Scott (ed.), Risk Management for Accountants (abg professional Information, London)
Hofmann M. (2007). Large Companies Worry About Reputational Risks. Business Insurance, 41(18), 4
Hume E. C., Larkins E. R., & Iyer G. (1999). On Compliance with Ethical Standards in Tax Return Preparation. Journal of Business Ethics, 18(2), 229–238. doi:10.1023/A:1006054014567
Kadous K., & Magro A. (2001). The Effects of Exposure to Practice Risk on Tax Professionals’ Judgments and Recommendations. Contemporary Accounting Research, 18(3), 451–475. doi:10.1506/TF76-653L-R36N-13YP
Kaplan S. E., & Reckers P. M. J. (1985). A Study of Tax Evasion Judgments. National Tax Journal, 38(1), 97–102
Kirk J., & Miller M. L. 1986, Reliability and Validity in Qualitative Research. Beverly Hills: Sage
Lewis P. V. (1985). Defining “Business Ethics”: Like Nailing Jello to a Wall. Journal of Business Ethics, 4(5), 377–383. doi:10.1007/BF02388590
Lincoln Y. S., & Guba E. G. 1985, Naturalistic Inquiry. (Beverly Hills, CA., Sage)
Marshall R. L., Armstrong R. W., & Smith M. (1998). The Ethical Environment of Tax Practitioners: Western Australian Evidence. Journal of Business Ethics, 17(12), 1265–1279. doi:10.1023/A:1005721505618
Milliron, V. C.: 1988, ‹A Conceptual Model of Factors Influencing Tax Preparers’ Aggressiveness’, in S. Moriarity and J. Collins (eds.), Contemporary Tax Research (University of Oklahoma), pp. 1–15
Murphy R. (2007). A Game with No Rules. Accountancy Age, 18(October), 14–15
O’Dwyer B. 2004. Qualitative Data Analysis: Exposing a Process for Transforming a “Messy” But “Attractive” Nuisance. In C. Humphrey, B. Lee (eds) A Real Life Guide to Accounting Research: A Behind the Scenes View of Using Qualitative Research Methods. (Elsevier, Amsterdam), 389–405
O’Grady, M.: 2003, ‹Acceptable Limits of Tax Planning: A Revenue Perspective’, KPMG Tax Conference (Ireland)
Patton M. Q. 1990, Qualitative Evaluation and Research Methods. Newbury Park, CA: Sage
Power M. 2004, The Risk Management of Everything: Rethinking the Politics of Uncertainty. (Demos, London)
Reed K. (2007). Hartnett Urges Advisors to “Stop Moaning”. Accountancy Age, 19(July), 4
Rest J. 1983. Morality. In: J. Flavell, E. Markman (eds) Manual of Child Psychology, Vol. 3: Cognitive Development. John Wiley and Sons, New York, 556–629
Robson C. 2002, Real World Research, 2nd ed. (Blackwell, Oxford)
Roth J., Scholz J., & Witte A. 1989, Taxpayer Compliance, Volume 2: Social Science Perspectives. University of Pennsylvania Press, Philadelphia, PA
Saunders M., Lewis P., & Thornhill A. 2007, Research Methods for Business Students, 4 ed. FT/Prentice Hall, Harlow, Essex
Sayers D. L. 1933, Murder Must Advertise. New English Library Ltd., London
Schaefer J., & Zimmer M. (1998). Limiting Insurance Decisions and Premium Charges Among CPA Firms: An Empirical Analysis. Journal of Applied Business Research, 14(1), 69–84
Sikka P., & Hampton M. (2005). The Role of Accountancy Firms in Tax Avoidance: Some Evidence and Issues. Accounting Forum, 29(3), 325–343. doi:10.1016/j.accfor.2005.03.008
Simpson E. (2004). The Ramsay Principle: A Curious Incident of Judicial Reticence. British Tax Review, 4, 358–374
Singer P. 1994. Introduction. In: P. Singer (eds) Ethics. Oxford University Press, Oxford, 4–13
Smith K. (1990). Integrating Three Perspectives on Noncompliance – A Sequential Decision Model. Criminal Justice and Behavior, 17(3), 350–369. doi:10.1177/0093854890017003008
Taylor S. J., & Bogdan R. 1984, Introduction to Qualitative Research Methods, 2nd ed. Wiley, New York
Tiley J. (2004). Tax Avoidance Jurisprudence as Normal Law. British Tax Review, 4, 304–331
Weick K. E. (1983). Stress in Accounting Systems. Accounting Review, 58(2), 350–369
Westat, Inc.: 1980, ‹Individual Income Tax Compliance Factors Study Qualitative Research’, Report Prepared for the Internal Revenue Service
Wyman P. (1997). Upholding the Law. The Tax Journal, 10(November), 3–4
Yancey W. (1996). Managing a Tax Practice to Avoid Malpractice Claims. The CPA Journal, 66(2), 12–18
Yetmar S., Cooper R., & Frank G. (1998). Ethical Issues Facing CPA Tax Practitioners. The CPA Journal, 68(10), 28–33
Yetmar S., & Eastman K. (2000). Tax Practitioners’ Ethical Sensitivity: A Model and Empirical Examination. Journal of Business Ethics, 26(4), 271–288. doi:10.1023/A:1006294517573
Table of statutes
Great Britain. Finance Act 2000: Elizabeth II. Chapter 17. (2000) London: The Stationery Office
Taxes Consolidation Act (Ireland) 1997, Number 39 of 1997, Direct Tax Acts, Finance 2007 version, Irish Taxation Institute
USA. The Sarbanes-Oxley Act of 2002, Pub. L. No. 107–204, 116 Stat. 745 (July 30, 2002)
Table of cases
Ayrshire Pullman Services and D.M. Ritchie v CIR 14 TC 754
Barclays Mercantile Business Finance Ltd v Mawson HL 2004
Fitzwilliam (Countess) and Others v CIR [1993] 3 All ER 184
Furniss v Dawson [1984] AC 474
Ramsay (WT) Ltd v CIR [1981] 1 All ER 865
Re Weston’s Settlements [1969] 1 Ch 223
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Doyle, E.M., Hughes, J.F. & Glaister, K.W. Linking Ethics and Risk Management in Taxation: Evidence from an Exploratory Study in Ireland and the UK. J Bus Ethics 86, 177–198 (2009). https://doi.org/10.1007/s10551-008-9842-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-008-9842-9