Individuals, sole traders and businesses often use accountancy services to manage their financial affairs. The advice given by accountants is often appropriate but can on occasions fall short of the required standard and duty of care.
If you have suffered a financial loss due to your accountant acting in a way that you think could have been negligent then you may be able to bring a professional negligence accountants claim.
Our specialist team of professional negligence solicitors have helped a number of clients sue their accountant for negligence in a wide range of scenarios. Some examples of accounting negligence cases that we have advised clients upon include:
- incorrect tax advice,
- negligent audits,
- inaccurate valuation of company assets,
- failure to prepare account documents,
- missing accounting deadlines,
- inadequate advice concerning tax reliefs / exemptions, and
- undervaluation of companies or the disposal of shares
If you are a business, sole trader or private individual and your accountant has provided the wrong advice or made an accounting error that has resulted in a financial loss or a loss of chance for you then call our accounting professional negligence experts for a free case assessment. You can call our team on 0808 164 0808 or complete the online form and we will call you back.
We explore below some of the above examples in greater detail.
Incorrect tax advice
A principal part of an accountant’s job is to offer advice regarding the tax implications involved in business dealings. If this advice proves to be wrong, it can have serious consequences for the client, including loss of revenue.
Audits negligently conducted
A common use of an accountant is to instruct them to review a company’s documents, and ensure that all the accounts are in order. This usually occurs on an annual basis. If an accountant misses out vital information within the finances of a company, such as failing to detect a fraud, then that company could be held liable for not bringing such an occurrence to light. Similarly, if the accountant fails to follow the correct procedures in the course of their auditing work, then the company may suffer as a consequence.
Inaccurately valued company assets
During the acquisition or sale of a company’s assets, the use of an accountant may be necessary to take valuations as to the assets attached to that company. If the accountant is negligence in their work, and this shows itself in the form of an inaccurate valuation of the assets, then the company may lose out as a result. This may be cause for a compensation claim against the accountant who did the work.
Failure to prepare account documents
At the end of a financial year, a company’s accounting period closes and documents need to be sent to HMRC and Companies House. Various documents relating to the financial happenings of a company must be prepared and filed. These include the company tax return, annual accounts such as an income statement, and a statement depicting the financial position of the company. If an accountant fails to prepare or properly file these documents then the company will be liable.
Missed accounting deadline
If an accountant is in charge of filing annual reports on time on behalf of clients, but misses a crucial deadline, this may result in a variety of consequences for the client. These range in severity, from interest or penalties to the company being rendered inactive or dissolved.
Inadequate advice concerning tax reliefs and exemptions
We are often asked the question “can I sue my accountant for not filing taxes correctly?”
In certain situations, individuals and companies may be entitled to tax reliefs or exemptions. Tax reliefs directly decrease the income on which you pay tax, whilst tax exemptions refer to omission from paying tax. If an accountant gives you faulty advice on either of these tax areas, then you may be held liable for tax avoidance. Alternatively, if the accountant misses certain reliefs or exemptions you are qualified for, then you may over pay tax, leaving you unnecessarily out of pocket.
Disputes involving undervaluing companies or disposal of shares
If an accountant undervalues a company, which, in financial terms, means it has a stock price lower than its asset value and/or earning potential, then its shares may be disposed of at a lower price than they should be. This may leave the company at a loss.
What complaints procedures are there to complain about the actions of my accountant?
Most accountants in England and Wales are recognised by either the Association of Certified Chartered Accountants (ACCA) or the Institute of Chartered Accountants in England and Wales (ICAEW). Both of these bodies operate a complaints function where clients can issue a grievance if they are not happy with how their accountant has dealt with their matter.
This usually refers to unsatisfactory advice whereas the legal approach takes a complaint a step further to negligent advice. This means that there is an argument that the accountant has not acted in a way that utilises the necessary care and skill required of them. If you believe your accountant has been negligence we may be able to help you recover your losses.
What time limits are in place for accountant malpractice?
You normally have six years from the date of neglect to bring an professional negligence accountancy compensation claim but this can vary depending upon the circumstances of your case. This time limit is called a limitation period.
Whilst there are time limits it is best to not delay speaking to a professional neglect solicitor if you believe you have grounds for professional negligence compensation claim as it is better to discuss potential claims early on.
What funding options are available for suing an accountant?
Our professional negligence lawyers are happy to discuss fee options and advise clients under a wide range of fee structures including working under:
- an existing legal expenses insurance,
- a fixed fee,
- traditional hourly rate retainers, or
- a “No Win, No Fee” basis.