Bringing a Professional Negligence Claim Against an Accountant

You trusted your accountant with your finances. If that trust has been misplaced, and you've suffered a financial loss as a result, you may have a claim.

Accountants are relied upon for some of the most important financial decisions individuals and businesses make. When they get it wrong, the consequences can be serious. Professional negligence law in England and Wales gives you a route to seek compensation.

What Kinds Of Mistakes Can Give Rise to a Claim?

Common examples include:

• Negligent tax advice leading to an unexpected liability or penalty
• Errors in accounts preparation that resulted in financial loss
• Failure to advise on a relevant tax relief opportunity
• Incorrect advice on a business transaction, such as a sale, purchase or restructure

Why Claim Against an Accountant Specifically?

Like other regulated professionals, qualified accountants are typically required to hold professional indemnity insurance. This means that even where the accountant's firm has since closed or changed, there is often a real prospect of recovering meaningful compensation through their insurer.

What Would You Need to Show?

To succeed in a professional negligence claim, you would generally need to demonstrate that:

• The accountant owed you a duty of care
• They breached that duty by falling below the standard of a reasonably competent accountant
• That breach caused your loss
• You suffered a quantifiable financial loss as a result

The Step-by-Step Process

1. Consider a complaint to the firm

Raising your concerns formally with the accountant's firm is a sensible first step. It creates a record of the issue and can sometimes lead to early resolution.

2. Consult a solicitor

Professional negligence claims against accountants can be technically complex, often involving detailed financial analysis. Early legal advice is essential to assess the strength of your claim and ensure you act within the relevant time limits.

Important: In most cases you have six years from the date of the negligent act to bring a claim, though in some circumstances a three-year period from the date you became aware of the loss may apply. Take advice promptly.

3. The Pre-Action Protocol

Before issuing court proceedings, you must follow the Professional Negligence Pre-Action Protocol, which involves:

• Sending a Letter of Notification to the accountant or their firm
• Following up with a detailed Letter of Claim setting out the alleged negligence, the loss suffered, and the supporting evidence
• Allowing the professional a reasonable period to investigate and respond
• This process is designed to encourage early settlement and avoid unnecessary litigation.

4. Negotiation

The majority of professional negligence claims settle without reaching court. Once the accountant or their insurer has responded to the Letter of Claim, there is usually an opportunity to negotiate a resolution. Mediation is also commonly used at this stage.

5. Court proceedings

If settlement cannot be agreed, proceedings may be issued in the civil courts. The appropriate court will depend on the value and complexity of the claim.

6. Conclusion of the claim

The aim is to put you back in the financial position you would have been in had the negligence not occurred. Recoverable losses may include additional tax paid, lost profits, penalties incurred, and the costs of putting things right.

How Smith Partnership can help

Our professional negligence team in Leicester advises individuals and businesses who have suffered loss as a result of negligent accountancy advice or services.

We will give you a clear, honest assessment of your prospects from day one. Contact our team by telephone on 0116 247 2000, complete our contact form, or send us an email via info@smithpartnership.co.uk. 

We also have offices across the East Midlands and Staffordshire with contentious probate solicitors, in Burton, Derby, Stoke-On-Trent and Swadlincote.