Bringing Professional Negligence Claims Against Accountants

Accountants play a critical role in ensuring the financial health of businesses and individuals. Whether it’s managing tax obligations, preparing financial statements, or providing strategic financial advice, their work carries significant responsibility. However, when accountants fail to meet the standards expected of their profession, the consequences can be damaging. If their negligence causes you financial loss, you may have grounds to bring a professional negligence claim against them.

What is Professional Negligence?

Professional negligence occurs when an accountant breaches their duty of care, falling below the standards reasonably expected of a competent professional, and this breach directly causes financial harm. Common examples of accountant negligence include:

1. Errors in Tax Filing: Filing incorrect tax returns or failing to meet deadlines, resulting in penalties or overpaid taxes.
2. Poor Advice: Providing incorrect advice on financial matters, such as tax planning, investment decisions, or business restructuring.
3. Mismanagement of Accounts: Failing to maintain accurate financial records or detect fraudulent activity.
4. Failure to Comply with Regulations: Not adhering to laws and regulations, which can lead to legal repercussions for clients.
5. Conflict of Interest: Acting in a way that prioritises the accountant’s interests over those of their client.

Bringing a Claim

For a claim to succeed, you must demonstrate:

• A duty of care was owed.
• There was a breach of that duty.
• The breach caused you quantifiable financial loss.

Identifying the Duty of Care

Accountants owe a duty of care to their clients to act with skill, competence, and diligence. This duty arises from the contractual relationship formed when you engage their services. Additionally, in some cases, accountants may owe a duty of care to third parties who rely on their work, such as investors or stakeholders.

Proving the Breach of Duty

To establish a breach of duty, you must show that the accountant’s actions fell below the standards expected of a reasonably competent professional in their field. This often involves comparing their conduct to industry norms and practices. Expert evidence from another qualified accountant is typically required to demonstrate the deviation from these standards.

Establishing Causation and Loss

Even if an accountant’s work was substandard, not all errors will give rise to a claim. You must prove that their negligence directly caused your financial loss. This can involve showing:

• How the error or omission led to specific losses (e.g., tax penalties, lost business opportunities).
• That these losses would not have occurred had the accountant performed competently.

It is also necessary to quantify your losses, which may include:

• Financial penalties or fines.
• Overpayments of tax.
• Costs of rectifying the accountant’s errors.
• Loss of business profits or investment returns.

Steps to Take Before Bringing a Claim

1. Review the Contract: Examine the terms of engagement to understand the scope of the accountant’s responsibilities and any limitations on liability.
2. Gather Evidence: Collect all relevant documents, such as correspondence, financial records, and reports prepared by the accountant.
3. Obtain Expert Advice: Engage a legal professional experienced in professional negligence claims to assess the merits of your case and guide you through the process.
4. Attempt to Resolve the Matter Informally: Consider raising your concerns with the accountant or their firm directly to seek an explanation or resolution.

Formal Complaint Procedures

Before initiating legal proceedings, you may wish to lodge a formal complaint with the accountant’s regulatory body. In the UK, this could be:

• The Institute of Chartered Accountants in England and Wales (ICAEW)
• The Association of Chartered Certified Accountants (ACCA)
• The Chartered Institute of Management Accountants (CIMA)

These organisations can investigate complaints and take disciplinary action where appropriate, although they do not award compensation.

Time Limits for Claims

Professional negligence claims are subject to strict time limits. In general:

• You have six years from the date of the negligent act to bring a claim.
• If the negligence was not immediately apparent, you may have three years from the date you became aware of it, provided this is within 15 years of the original act (the “longstop” limit).

Prompt action is essential to preserve your right to claim.

Remedies and Outcomes

If your claim is successful, the court may award damages to compensate for your financial losses. This aims to place you in the position you would have been in had the negligence not occurred. Remedies may include:

• Reimbursement for penalties or overpayments.
• Compensation for lost profits or opportunities.
• Recovery of costs incurred to rectify errors.

In some cases, you may also seek interest on your losses and reimbursement of legal costs.

Why Choose Jeremy Gordon?

At Jeremy Gordon, we have extensive experience handling professional negligence claims against accountants. Our team of skilled solicitors understands the complexities of financial matters and is committed to achieving the best outcomes for our clients. We provide:

• Tailored Advice: Solutions tailored to your unique circumstances.
• Expert Representation: Access to leading experts to support your claim.
• Transparent Costs: Clear guidance on legal fees and funding options.

Contact Us Today

If you believe you have been a victim of professional negligence by an accountant, don’t hesitate to seek legal advice. Our team is here to help you navigate the process and secure the compensation you deserve. Contact Jeremy Gordon today to arrange a consultation.