Alec is a sole practitioner, who acts for L Ltd in relation to its corporation tax affairs. The company has recently submitted its corporation tax return for the accounting period ended 31 December 2021. Yesterday, the managing director of the company mentioned, in a meeting with Alec, that the company understated the proceeds on the disposal of a plot of land in September 2021. The director indicated that they did not wish to disclose the true proceeds to HM Revenue & Customs (HMRC).

Required:

(a) Explain why the understatement is tax evasion, rather than tax avoidance.

(b) Explain in brief how Alec should deal with the suggestion from the director that the true proceeds should not be disclosed to HMRC, from an ethical viewpoint.