Our team’s report prompts settlement in tax case

Background

A firm of accountants faced a claim of professional negligence in the delivery of tax compliance services. The claimants, who owned an engineering business, argued that they had overpaid tax for a number of years as a result of alleged failings in the advice they were given by the defendant about the structure of their business. They claimed that they had not received appropriate advice about how they should withdraw monies from their businesses, and had paid more tax as a result. Our team were instructed as advisers for the defendant.

Action

Our Forensic Services team considered the contractual duty of the defendant based on the engagement letters and the responsibilities of a ‘reasonably competent accountant’. The team’s report included detailed calculations of the potential tax liability in a number of scenarios where sums were drawn from the businesses as dividends, salary and pension contributions.

Outcome

Once the team submitted its preliminary report the matter was settled. The report helped the insurer and insured to understand the impact of the alleged failings and the strength of the case.