The Tax Practitioners Board (TPB) is looking for comments on sections of its draft code of professional conduct for tax advisers.

The code includes acting in the best interests of clients in a similar way to the Future of Financial Advice (FOFA) legislation.

One difference from the FOFA legislation is that the adviser is not to make any personal profit or gain from the advice unless authorised by the client.

The TPB code also requires the adviser to act lawfully in the best interests of the client, but warns: “Acting in the best interests of clients’ is not a justification for a tax adviser to contravene or disregard the law.”

Another section requires the tax adviser to take “reasonable care” when acting for clients, but this is not covered by the common law.

“There is no set formula for determining what it means to take reasonable care in any given situation,” the proposed code says.

“The starting point for determining what ‘reasonable care’ is will involve a tax adviser exercising their own professional judgement taking into account relevant factors.”

The proposed code also deals with conflicts of interest in the same way financial advisers have to comply with FOFA legislation.

TPB Chairman Ian Taylor says all tax advisers must comply with this code.

“To assist tax advisers to understand what this means for them, the TPB has issued draft documents relating to acting in the best interests of their clients, taking reasonable care to ascertain a client’s state of affairs, applying tax laws correctly and managing conflicts of interest,” he said.

The TPB has also listed the penalties for not complying with items in the code. These range from a written warning to loss of registration.

The adviser could also be liable for a civil penalty issued by the courts and being made to pay compensation to the client.

Comments on the proposed code close on July 11.