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Accountant Negligence: Out of Their Depth?

Author headshot image Posted by , Senior Associate

Professional advisers, in this case accountants, have a duty to advise their clients to seek specialist advice on savings opportunities in order to avoid Professional Negligence liability.

Last summer, the High Court held that a firm of accountants had a duty to advise their client that he may have been, for tax purposes, treated as a non UK domiciliary resident so that he could have consulted an appropriate tax specialist to seek advice on the tax avoidance opportunities which may have been available to him.


In the High Court case of Mehjoo v Harben Barker the Judge found that Mr Mehjoo was likely to have been treated as a non-UK resident for tax purposes.  Accordingly, before selling his UK based business Mr Mehjoo should have been advised to seek specialist advice on avoidance schemes which would have saved him incurring significant unnecessary tax penalties.

This case raises the issue of accountant negligence but serves as an important lesson for all professional tax advisers – which would include accountants, IFAs and solicitors – that they have a duty to tell their clients that they should seek advice from a tax specialist where the necessary advice is beyond their usual remit of expertise.

Learning points

The important lesson is that the accountants were not criticised for their lack of knowledge, they were found to be negligent for trying to go it alone in an area that they didn’t fully understand.  This reiterates the industry guidance for those working in tax: “the adviser must not undertake professional work which he is not competent to perform unless he obtains help from an appropriate specialist.”

If you have taken generalist advice on tax implications of buying or selling a business which has resulted in paying unnecessary or avoidable penalties you may have a claim for professional negligence.  Contact a member of the Professional Negligence Team today on 0800 051 8057.

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