From bad to worse - how periods of recession increase negligent claims

Professionals such as accountants and tax advisers are meant to provide trustworthy financial and taxation information and advice to a company and/or individual.

Although a full review of any case is required to assess a potential claim, here are some examples of how accountants and tax advisers could have been professionally negligent and which cases have become more prevalent in difficult economic times:

• Undervaluing companies for disputes or disposal of shares.
• Inadequate advice concerning tax reliefs and exemptions.
• Inadequate business advice.
• Overcharging of fees.
• Failing to spot a fraud when auditing company accounts. These kinds of claims increase in a recession because financial stress encourages fraudulent behaviour and because a recession tends to cause fraudulent schemes to unravel or be exposed when the tide goes out.
• Over value company assets. Company valuations will typically be far more volatile in a recessionary environment.
• Tax advisers negligently mis-selling schemes designed to mitigate or defer income or capital gains tax and/or failed to adequately warn of the risk of a successful challenge by HMRC.  Tax receipts have obviously fallen sharply during the recession and HMRC is under pressure to increase receipts and is taking a much harder line on taxpayers.  This climate has undoubtedly led to an increase in incidents where the client blames their tax adviser for the financial consequences of the fall out.

If you think your accountant or tax adviser has been professionally negligent do not hesitate to contact us.