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taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
Satisfied Customers: 3663
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based)
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Dear XXXXX I have a friend who did accounts for a business

Resolved Question:

Dear XXXXX

I have a friend who did accounts for a business which was subcontracting. They went through the VAT threshold and did not register for VAT on time. Consequently, the company had to pay back dated VAT of £30,000. However, my friend failed to advise them that this could have been recouped from the contractor if he had issued the contractor with a VAT only invoice since the contractor was registered for VAT and could have claimed this back on their own VAT returns.

It would appear that the client would have a claim against the accountant for not advising him of this. Is there a time limit for claims of this sort? It happened in 2007.

Thank you

Steve
Submitted: 1 year ago.
Category: UK Tax
Expert:  Lindie-mod replied 1 year ago.

Hello,

I'm Lindie, and I’m a moderator for this topic. I sent your requested professional a message to follow up with you here, when they are back online.

If I can help further, please let me know. Thank you for your continued patience.

Best,

Lindie

Expert:  taxadvisor.uk replied 1 year ago.

Hello, if you have any questions or need further clarification after reading my answer please let me know.

 

Hi Steve, I am another tax expert here. Would you like me to help you in the absence of the expert the question was addressed to?

 

If so, please let me know.

 

Many thanks

Customer: replied 1 year ago.



Dear Tax expert


 


Yes I would like you to help me with the answer.


 


Thank you


 


Steve

Expert:  taxadvisor.uk replied 1 year ago.

 

Steve, thank you for your reply...

 

My answer is based on scenario if I were the accountant and my client was considering a claim against me for negligence ..

 

I will look at the letter of engagement to ascertain what my responsibilities are in this engagement.. was advising on VAT matters as part of the terms of engagement?

 

If yes, did I give proper advise expected of me as a professional. Do I have notes to support the basis of my advise.

 

I would contest the claim if I am fairly convinced that:

 

The advice was outside my terms of engagement or

If within, I had given proper advise and I can support it from my notes etc.

 

For your friend, in order to succeed, he would have to prove that:

 

He had asked for advice and was not given proper advice or expected it as it was covered in the letter of engagement.

 

It would be a lengthy and costly process. The incident happened in 2007 and he is within his time limit to lodge a claim.

 

The accountant would most probably have professional indemnity insurance to cover claims for negligence.

 

If you need more information please let me know before you rate my service.

 

I hope this is helpful and answers your question. If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

 

I am available for any follow up questions you may have, and you can use the reply button to post your follow up questions to the page.

 

Customer: replied 1 year ago.

To tax advisor


 


Thank you for your answer. I still have a few queries however. What is the time limit for making a claim if 2007 is still within the period? How many years would need to lapse before any possible claim could not be made?


 


As far a I am aware, no letter of engagement was ever signed. Could a claim still be made?


 


In the event of a claim, would it be the insurance in place at the time of the incident or the insurance company in place at the date the claim is received that would be liable? An accountant may be insured with a different insurance company now than the insurance that was in place at the time the mistake was made.


 


Thank you


 


Steve

Expert:  taxadvisor.uk replied 1 year ago.

Steve, thank you for your reply.

 

The limitation Act 1980 sets out limits within which action may be taken for breaches of law.

 

As an example, breaches of an ordinary contract are actionable for six years after the event. I am not a lawyer and you may wish to dicuss the legal position of a contract between a client and his accountant in the absence of a formal letter of engagement between them.

 

The current insurance policy should cover claims made in the period of cover. Some insurance policies may cover claims relating to previous period provided there was continuous cover and no previous claims within specified number of years.

 

If you have a valid claim, then it is the problem of the accountant whether he has protection or not.

 

I hope this is helpful and answers your question. If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.

 

taxadvisor.uk, Chartered Certified Accountant
Category: UK Tax
Satisfied Customers: 3663
Experience: FCCA - over 35 years experience as a qualified accountant (UK based)
taxadvisor.uk and 2 other UK Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 1 year ago.

Steve, thank you for accepting my answer.

Your bonus payment is greatly appreciated.

 

Good luck.

 

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