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Legal Ease
Legal Ease, Lawyer
Category: Canada Law
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Experience:  Lawyer
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Can I sue my previous accounting firm? I gave an accounting

Customer Question

Can I sue my previous accounting firm? I gave an accounting firm our 2013 year end early April 2015 and as of mid Nov they still hadn't filed our year end. They passed it to various people and weren't diligent in completing it. I fired them Nov 21st and asked them to send whatever they had done to date as I was going to hire a new accountant to do the year end. They asked for money up front and refused to send anything. I have not seen anything that they may or may not have done during the many months they had all of our information. The new company started right away and within two weeks they have finished everything. We just heard yesterday that our research and development claim which would have resulted in over $100,000 refund from the government won't be reviewed as the due date for filing that was no later than 18 months after the year end (June 2015). Can I sue the previous accounting firm as they had everything from April and should have filed within that time. We were unaware that there was a deadline for R&D. The result is that we won't get that refund and since the R&D would have removed any tax payable, we may have to pay tax as well as a result of their negligence. Also, after I fired them, the accountant owner, "disappeared" for two weeks and was unavailable. I tried to get any of their work so it would shorten the work of the new accountant but they behaved in bad faith and asked for $4800 up front before they would give me anything. Can I sue them to get back what we are going to lose? Also, tax payable has interest charged and they caused us more interest by delaying finishing anything or even working on our file early April to Nov 21st. Your advice?
Submitted: 1 year ago.
Category: Canada Law
Expert:  Legal Ease replied 1 year ago.

Did they know about what would happen if they did not complete your year and in time?

Customer: replied 1 year ago.
I didn't know about any deadline for R&D until the new company told me yesterday. I assume that since they are accountants they should know about deadlines to file and since their own website says "to ensure all your government reporting is government compliant, accurate and completed in a timely manner". Since the new company completed our year end in two weeks, they should have been able to do the same. They were given everything early in April, lots of time to meet that deadline. Can we sue for the $100,000 refund that we have now lost and can we sue for the tax payable that we now have to pay which would have been wiped out by the R&D. And also can we sue for the interest payable on tax since they delayed working on our file for many months which incurred more interest.
Customer: replied 1 year ago.
Also, their website says they do "CRA Scientific Research & Experimental Development Claims and preparation of Corporate Income Tax Returns and accompanying SR&ED claims, including consultation for SR&ED Claims" so if they advertise that they do this, then they must be aware of the associated deadlines too which I was not aware of until yesterday.
Customer: replied 1 year ago.
Would this be considered professional negligence? There is at least one chartered accountant that worked on my file. The owner is not a chartered accountant. The accounting firm is a corporation "inc."
Expert:  Legal Ease replied 1 year ago.

This is professional negligence almost without a doubt.

You can sue for damages so long as the damages are reasonable and foreseeable. In this case based on the facts in your post it seems that these damages are reasonable and forseeable because this accounting firm either knew about the deadline or most surely should have.

I suggested as a next step you consult with a lawyer face-to-face with a view to retaining the lawyer to send this accountancy firm a demand letter demanding these damages and threatening a lawsuit.

They will have insurance to cover this and hopefully they will pass this onto their insurance he will settle in due course.

Customer: replied 1 year ago.
Can I sue for $100,000 for the lost R&D claim, sue for the tax payable and for the interest on the tax payable? Also, under the circumstances do I have to pay their bill of $4800 they are asking for when they refused to send me any work that they may or may not have done during the 7 1/2 months and despite many emails asking them for the files, they disappeared and refused, which resulted in the current firm having to start from the beginning. I don't think I should have to pay twice when I received nothing from them. I did tell them over and over that the longer they delayed sending the files, those files would be worth less and less to me since the current firm was working diligently to finish the year end and get it filed since it is very very late.
Expert:  Legal Ease replied 1 year ago.

Yes. My point was that you could sue for all of these damages as in my mind they are all reasonable and forseeable and a direct result of their negligence.

Customer: replied 1 year ago.
Thanks for your advice!
Expert:  Legal Ease replied 1 year ago.

You are very welcome.

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