PROFESSIONAL NEGLIGENCE

Many areas of accountancy and tax laws are very complex, and it is not uncommon for HMRC to take a view on the interpretation of those laws which is different from the advice given by a tax adviser (whether a solicitor, accountant, CTA or TEP).

A professional adviser is required to provide advice to the standards of a reasonably competent adviser. If this hasn’t happened, the client may be entitled to claim professional negligence and be paid compensation in damages, either for breach of contract and/or breach of the laws relating to negligent advice.

In any negligence claim, the relevant question is whether a reasonably competent specialist tax adviser (whether lawyer, ICAEW, CTA, TEP etc.) at the time in question, with particular expertise in the relevant area of tax, applying proper skill and care, could have advised as the adviser did regarding the particular planning or other tax matter, such as the availability of a tax relief (e.g. entrepreneurs’ relief or substantial shareholding relief).

If the answer to that question is “yes”, there is no negligence just because other reasonably competent tax professionals of equivalent expertise would have taken a different view or advised in different terms. In other words, was the advice within the spectrum of advice that a reasonably competent tax professional could have properly given?

Professional negligence claims can be highly complex. Instructing a specialist professional negligence adviser with direct experience of tax and accountancy issues, as early as possible, can ensure you get the support you need to deal with a claim (or to defend against such a claim).