Claims against accountants

If you have suffered a financial loss because your accountant got it wrong, you may be able to bring a professional negligence claim against your accountant (or their firm) to recover compensation. Negligent accountancy advice can have serious consequences: unexpected tax liabilities, penalties and interest, failed transactions, cashflow crises, reputational damage, and, sometimes, insolvency. It is important to seek early legal advice from a professional negligence solicitor to assess your options and avoid further losses.

What constitutes professional negligence by an accountant?

Accountants owe duties to act with reasonable skill and care. Those duties can arise under a contract (the engagement letter/terms) and/or in tort (negligence), and the scope of the duty will depend on what the accountant was instructed to do and what it was reasonable for you to rely upon.

A claim usually arises where an accountant has fallen below the standard expected of a reasonably competent accountant and that failure has caused you a measurable loss. Many claims involve a combination of technical errors and a failure to warn; such as not explaining risks, assumptions, deadlines, or the consequences of a particular tax or accounting treatment.

Common examples of negligent accountancy

Our professional negligence solicitors regularly see allegations of a negligent accountant arising from:

• Negligent tax advice (including incorrect advice on reliefs, structuring, residency/domicile issues, VAT/PAYE, SDLT, IHT, R&D and time limits for elections or claims).
• Failure to advise on tax risks (for example, not flagging HMRC challenge risk, evidence requirements, or alternative compliant options).
• Preparation of misleading or inaccurate accounts, management accounts, or forecasts (including errors in revenue recognition, provisions, debtor recoverability, and valuation).
• Audit failures, including inadequate testing, missed red flags, or failure to identify material misstatements.
• Transaction support errors, such as incorrect advice in relation to completion accounts, earn-outs, working capital adjustments, or due diligence.
• Failure to file returns on time or to meet statutory/regulatory deadlines, resulting in penalties, interest and wider loss.
• Failure to advise directors properly (for example, around solvency, distributable reserves/dividends, or the financial risks of a proposed course of action).

Not every mistake will justify a claim. It’s important to seek professional legal advice to consider if the error amounts to professional negligence and whether you can prove that it caused significant losses.

Time limits for bringing a claim

Limitation is a critical issue in accountant negligence claims and should be assessed early.

In broad terms:

• A claim in contract must generally be issued within six years from the date the cause of action accrued.
• A claim in negligence (tort) must generally be issued within six years from the date the cause of action accrued.
• Where you did not have the relevant knowledge at the time, some negligence claims may benefit from a “date of knowledge” extension—three years from the starting date (if later than six years), subject to an overall longstop.
• There is also an overriding 15-year longstop for certain negligence claims not involving personal injuries.

Limitation can be fact-sensitive (and different time limits may apply depending on the precise cause of action). Where limitation is tight, there may be options such as a standstill agreement—something the parties may consider in the pre-action process.