Blog
Kingsley Napley’s Medical Negligence Team ‘walks together’ with the Dame Vera Lynn Children’s Charity
Sharon Burkill
I was recently fined by HM Revenue & Customs after my accountant prepared inaccurate tax returns. I have had to pay substantial additional tax as well as significant amounts to cover late payment interest and charges. Do I have a claim against my accountant and what would I need to do to bring one? Does it matter that the tax returns were filed many years ago, but HMRC has only alerted me to this issue now?
Elliot Grosvenor-Taylor, associate in our professional negligence team, says you may well have a potential claim against the accountant for professional negligence or breach of contract. It is well-established that professionals owe their clients a duty of care. This is usually evidenced by the written retainer or engagement letter between the professional and the client. In the absence of a written retainer, it may be implied by the parties’ conduct.
Depending on the extent of the inaccuracies in the tax returns (and the reasons for these), it sounds like your accountant could have breached their duty of care to you. The standard to be applied, when considering this, is whether the accountant, when acting for you, fell below the standards of a reasonably competent accountant.
For a claim to be successful it is necessary to prove that the accountant’s breach caused you losses. Depending on the reasons for paying the additional tax, this may be satisfied, however, you would not be able to claim for tax payments which would ordinarily have been paid had the accountant provided accurate returns, as this is not a loss. However, if the accountant’s inaccuracies led to the late payment interest and penalties, these losses would be potentially recoverable.
HMRC’s Compliance Handbook states: “A person cannot simply appoint an agent and deny responsibility for their tax affairs. The person still has a duty to take reasonable care, within their ability and competence, to make sure that what they are signing for is correct.”
This is known as contributory negligence and the question asked is whether you have contributed towards your own loss. If so, this may reduce the amount of your claim, or extinguish your claim entirely. For example, did you give insufficient information to your accountant or did you fail to spot any errors that should have been picked up when reviewing your tax return?
You have six years from the date of the negligence to bring a claim, but this may be extended if the negligence became apparent at a later date. In those circumstances you have three years from the date of knowledge of the facts which might give rise to a claim.
As HMRC has only alerted you to the issue now, even though the six-year timescale has passed, you are potentially within the three-year extended limitation period. However, be aware that professional negligence claims need to be resolved within 15 years of the negligent act.
First published in Financial Times on 3rd April 2024.
further information
If you have any questions or concerns about the topics raised in this blog, please contact Elliot Grosvenor-Taylor.
about the author
Elliot Grosvenor-Taylor is an Associate in the Dispute Resolution Team at Kingsley Napley. Elliot’s practice covers a wide-range of areas but he has a particular interest in civil fraud and professional negligence related disputes. Elliot also acts in high-value international arbitrations.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
You may also be interested in:
Blog
A New Era of Football Regulation - The Independent Football Regulator
Natalie Cohen
Blog
Court of Appeal clarifies data protection claims for non-material damage: A win for claimants - But what are the implications for controllers and processors?
Caroline Sheldon
Share insightLinkedIn X Facebook Email to a friend Print