Background

FRP was engaged by lawyers acting on behalf of professional indemnity insurers to provide advice on a £4 million claim against a firm of accountants. The claim focused on tax advice given regarding restructuring of the claimant’s businesses. FRP was instructed to assess the validity of the claim, and to consider the quantum of the loss arising (if any) from the failure to obtain Entrepreneurs’ Relief on a transaction, as well as any related unforeseen taxes.

Action

Our Forensic Services team were appointed as Party Expert to give an independent view on whether the accountant provided the advice expected of a ‘reasonably competent professional’. The review of the claim considered the financial accounts, tax computations and the engagement, as well as what alternative strategies could have been undertaken and their potential outcomes, and the extent to which the claimant had mitigated their loss. The team then considered the opinion given by the claimant’s advisers and gave a view on its strengths and weaknesses.

Outcome

FRP assisted the instructing lawyers over 18 months up to the point of mediation, and supported the instructing counsel and client in mediation. The team then met with the claimant’s tax advisers during mediation to discuss and clarify the areas where we agreed. The claim was settled at mediation for a significant discount on the original claim, bringing a long-running legal dispute to a close and enabling both claimant and defendant to move forward.