Accountant negligence case study

Background

We acted for a company which was involved in mechanical engineering, specifically for heating systems. They produced detailed guidance for their clients as to how to maintain those systems. The client was not advised by its accountants that it could claim R&D (research and development) relief on its tax return in respect of those guidance schedules. When the client became aware of the possibility of being eligible for such tax relief it specifically asked its accountants to advise on the matter. The client was told that it would not qualify. Though unhappy with the advice, the client felt that it had to accept the same. Later the client went to a seminar on the subject and became convinced that it did qualify and put the issues to his accountants again. For a second time they were told that no relief was available. Our client then instructed a specialist tax adviser who successfully argued with HMRC that the client should qualify for the relief. This was accepted by HMRC for the current year and going forward but claims for two earlier years were time barred under HMRC rules. The client looked to recover its substantial losses from its accountants.

Th matter was complicated, as the client although unhappy with the advice, had delayed seeking an alternative opinion and so was arguably to blame for being out of time to sue his accountants.

How we helped

We successfully argued that given the on-going relationship, the accountants had started time running again after the second request for advice, so that it was not out of time for losses arising after that second request. A satisfactory settlement for our client was then reached.