Why should your integrity as an accountant be tarnished?
Accountants advise their clients, whether they be individuals or businesses, on a wide range of financial matters. Sometimes a client may make a professional negligence claim against an accountant which threatens the integrity of the individual and the profession. Professional negligence claims are complex and as a result, it is imperative to follow a strict pre-action protocol stage. Legal advice is therefore imperative.
Kidwells are specialists in the area of professional negligence. We will be able to assess the potential of the claim made against you and identify if your supposed breach of duty is substantial. If the claim holds truth we will encourage both parties to agree on a settlement without the need for trial. We have the experience though to take the claim to trial if no other resolution is available.
Important things to consider:
- Every professional has a duty of care to their clients. Therefore, if your client believes you did not meet the standards they expect of you, they have the right to sue you for negligence.
- By law, your clients have 6 years from the date on which the negligence took place to make a claim against you and your service as an accountant. However, they have 3 years from the date on which they first knew they’d suffered from a loss, to make a claim.
- If a client makes a claim against an accountant for professional negligence their solicitor may encourage them to do a pre-action protocol. This aims to limit the number of cases that need court proceedings and encourages you and the client to resolve dispute matters earlier and more amicably using mediation, arbitration or negotiation.
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Each claim and case is unique. However, there are a few common reasons people pursue a negligence claim against an accountant. This includes;
- Incorrect tax advice
- Missing deadlines to file annual tax returns
- Failing to draw up accurate accounts
- Not advising you about tax regulations
- Over-or undervaluing company assets
- Failing to advise you on capital allowances in a commercial property transaction.
Also in order for a claim to be successful, each claim must prove three things. Firstly, that the accountant owed them a duty of care, the accountant acted in breach of that duty and the accountants breach was the cause of their loss.
Your client can make a complaint through your accountancy firm’s own complaints handling procedure or the ACCA and ICAEW.
The client will give their solicitor as much information as possible about why they are making a claim. They’ll also provide any documents that you gave to them. This enables their solicitors to investigate whether the service you provided as an accountant led to financial loss.
Our team at Kidwells will study whether the grounds they have for making a professional negligence claim are acceptable. We will provide you with guidance on the best way to move forward from here.
If a claim is made against you for professional negligence whilst practising as an accountant, you should immediately seek legal advice. You should contact your insurers before incurring any legal costs. Additionally, you should send all correspondence you receive in relation to the claim to your insurers and not respond to it without the insurer’s permission.