Unlike the term ‘solicitor’, whose usage is regulated by statute, there are no restrictions on the use of the term ‘accountant’. This means that anyone can badge themselves as an accountant and, as a consequence, the standard of service provided to clients across this profession is much less assured.
However, that is not to say that the accountancy profession is entirely unregulated. It is not. A large number of accountants are governed by such bodies as the Institute of Chartered Accounts of England and Wales (ICAEW), the Association of Chartered and Certified Accountants (ACCA) or the Chartered Institute of Management Accountants (CIMA), each of which aims to ensure that its members maintain the highest standards of professional service and conduct.
Common mistakes by negligent accountants
Historically, professional negligence claims against accountants were relatively limited in number, with a significant number of the claims that were made arising from company audits. However, in recent years, not only has there been an increase in the volume of claims against accountants, but also in the variety of accountancy services that give rise to them. Indeed, some commentators predict that the volume of claims against accountants is only likely to increase, as the profession attempts to undertake more advisory work and more of the sort of legal services traditionally provided by lawyers, such as will writing, estate administration and litigation.
Some common mistakes that can give rise to successful claims against accountants are:
- Failing to prepare accurate statutory accounts, resulting in a material mis-statement
- Failing to comply with a filing deadline
- Failing to warn of the risks associated with a tax mitigation scheme
- Failing to warn of changes made to tax legislation
- Failing to advise correctly on the need to register for, or the treatment of, VAT
- Failing to advise on allowances and exemptions available to mitigate tax
- Failing to detect and report fraud as part of a company audit
- Failing to identify accounting irregularities as part of a share purchase valuation
- Failing to correctly value the goodwill of a business
How to claim against an accountant
Most claims are commenced by correspondence and by following the procedures set out in the Professional Negligence Pre-Action Protocol. While in some cases it may also be necessary to institute court proceedings, a considerable number of claims are resolved without the need to do so.
Even if the firm or practice at fault is no longer trading or has been dissolved, it may still be possible to make a claim and recover compensation. How to claim in these circumstances is explained in our article: Claims against closed professional firms and practices
Answers to many of the practical questions we frequently get asked about making a claim against an accountant are set out in our guide: Professional negligence claims: Your key questions answered
Assessing the merits of a claim
Before embarking on a claim against an accountant, a careful assessment will need to be undertaken of a number of important issues, including:
- The scope of the legal duties owed by the accountant
- Any actions taken by the accountant to comply with those duties
- The nature and extent of the loss caused by any breaches of those duties
This can be a complicated process, which is likely to be fact sensitive and will often necessitate input from an independent expert.
Time limits for claims against accountants
There are a number of important reasons for acting promptly when a mistake has been made or discovered. One of these are the time limits that apply to all professional negligence claims. These time limits, some of which are easy to miscalculate, are explained in our guide: Time limits for professional negligence claims – FAQs
Specialist legal advice
As professional negligence specialists, we act for clients nationwide to resolve claims against a wide range of professionals, including accountants and auditors. As you can discover here, the service and advice we provide to our clients is unique in a number of important respects.
If you would like to arrange an initial consultation with us, free of charge or commitment, please do not hesitate to contact us on 0800 195 4983 or by email at email@example.com.