In short, yes, you can sue your accountant. When dealing with finance, mistakes by professionals could be costly to both individuals and businesses. The advice that accountants or tax advisors give is critical. There are heavy fines and penalties for those who do not comply with HMRC deadlines or make errors in the figure work. And remember, at the end of the day it’s you, the business owner, who is responsible and pays the financial penalty. What’s more,the losses involved in any accountant negligence claim can sometimes be significant.
However if your accountant has provided bad or negligent advice which has resulted in financial loss for you or your business, you may well have a strong claim for professional negligence.
Professional Negligence Solicitors deal with cases where an accountant has not acted in accordance with the standards set by their profession.
Looking for specialist legal advice on your Accountant Negligence Claim? Call our expert team on FREEPHONE 0800 1404544 for FREE initial phone advice – no strings attached
Common Types of Accountant Negligence
You should be able to rely on your accountant to provide advice which minimises your tax liabilities and ensures the smooth and profitable running of your company. However this does not always happen.
Some of the most common examples of Accountant Negligence in the UK involve the following;
- failure to conduct a proper audit
- failing to detect fraud
- incorrect share valuations
- negligent tax advice
- making data entry errors
- failing to correctly categorize income and expenses
- failure to submit tax returns on time
With the value of these kind of errors often being substantial, negligent advice from your accountant could be catastrophic for your business.
Equally, there is much at stake for the accountant if a professional negligence claim is made against them. That means that many accountants and their insurers fight any negligence claim all the way. And that means that you’re going to need a solicitor with plenty of experience of these kind of negligence claims on your side.
Click here to discover more about running a professional negligence claim.
How to Prove Your Accountant Negligence Claim
1. You need to show that your accountant owed what is known as “”a duty of care” to you. Normally the accountant/client relationship is enough establish this, especially if you have a written contract with your accountant.
2. You must prove that the accountant has breached that duty of care. In simpler words, the accountant must have behaved in a way that a qualified accountant should not have done – that their behaviour was not what anyone would expect from a reasonable accountant
3. You must establish that you suffered either a substantial financial loss, or an anticipated loss
4. You need evidence to show that your loss came about as a direct result of the accountant’s professional negligence
A good and extremely common example of poor service from an accountant that won’t be sufficient to justify a professional negligence claim, is delay. Being too slow in producing accounts, for example, may be inconvenient and cause you business difficulties, but unless you actually suffer some form of direct financial loss, you won’t be able to claim compensation. However, that kind of poor service may well justify a complaint – either to the accountant or to one of their supervisory bodies (For details of how to complain about your accountant, see below).
A real example of accountant negligence
Let’s look at the particularly large scale example of Ernst & Young, one of the ‘big four’ accounting firms who, in 2005 were sued £700 million by Equitable Life, a former audit client, after the insurance company almost collapsed. This accountant negligence claim was in fact dropped but would have bankrupted the accountant’s UK division if it had succeeded. Small wonder that the profession is so well regulated!
If you have suffered loss as a result of a negligent accountant or tax consultant, such claims are usually complex and take time to resolve. And you can guarantee that your accountants’ insurer will make sure they have an experienced professional negligence solicitor on their side. That’s why so important to get the right legal advice of your own – from solicitors with plenty of experience of professional negligence compensation claims and suing accountants.
How can you identify genuine professional negligence specialists?
Well, a good start is making sure that they are members of the Professional Negligence Lawyers Association. The PNLA is the only national body of specialist professional negligence solicitors. Needless to say here at Bonallack & Bishop, we are PNLA members , as well as being members of the specialist Commercial Litigation Association.
Suing your accountant – paying your legal bills
When it comes to funding your case, there are a number of potential options for you, which our solicitors can discuss with you.
But dependent on the strength of your claim and the value of the sums you have lost, we will discuss with you the possibility of running your case on a no win no basis – which, in broad terms, means you need not worry about paying your legal costs.
Click here to read more about how no win no fee could help you in suing your negligent accountant.
Settling your professional negligence claim
Rest assured that our team will do their utmost to get the right result for you. However, that doesn’t mean rushing to court.
If at all possible, we will try to settle your claim sensibly without the need for a court hearing. Why? Going to court is expensive, slow and can be highly stressful.
We strongly support the use of what are called methods of “alternative dispute resolution”. The most well-known of these is mediation – and the head of our dispute resolution team is a qualified civil mediator himself. So you can be guaranteed that our team really understand how mediation works and how to get the best out of it.
However while we will do all we can to avoid your case having to go to court, if that’s simply not possible, you can rely on our team to fight your corner before the judge.
Suing your accountant for negligence – don’t delay
Most professional negligence claims, including claims made against negligent accountants, have strict time limits. In general terms you have just six years to start your claim – and the six years normally runs from the actual date of the mistake – or if you weren’t aware of an error at the time, six years from the date when you became aware of the negligent act.
The event, it always sensible to contact a solicitor at the earliest possible stage – while events are clear in your mind and before any potential evidence is lost.
Complaining about poor service or misconduct
Here at Bonallack and Bishop, we are able to help you with your accountant negligence claim – but as you will have seen above, that requires that you have suffered some actual financial loss. We cannot help you with any other complaint.
However, if, despite poor service or misconduct, you haven’t actually suffered financially, what are your options?
You can complain about your accountant. They have a variety of different qualifications. So depending on the qualifications of your particular accountant you may need to address your complaint to the appropriate regulatory body.
Most qualified accountants will fall under one of three professional bodies:
- Certified accountants are monitored by the Association of Certified Chartered Accountants (ACCA)
- Chartered accountants are regulated by the Institute of Chartered Accountants (ICAEW)
- Management accountants are supervised by the Chartered Institute of Management Accountants (CIMA)
Each of these have well controlled and structured complaints procedures. According to these regulating bodies, members are required to observe proper standards of professional conduct and refrain from ‘misconduct’ defined as any act likely to bring discredit on themselves, the regulating body or the accountancy profession.
These regulators have the power to impose a wide range of penalties for poor behaviour or client care– the most serious of which is being struck off as an accountant.