Who is liable for accountant mistakes?

As a director of a limited company, it’s your duty to provide accurate details to HMRC, even if you hire an accountant to assist you. If HMRC receives incorrect information, your company may face fees or charges, regardless of whether it was your accountant’s error.

Who will be if your accountant makes a mistake on your company accounts?

If my accountant has been negligent and made a mistake on my accounts, are they accountable for this, and who will be responsible for the additional money I owe HMRC?

When you engage an accountant to manage specific financial aspects of your business, you rely on them to precisely submit your accounts to HMRC. 

In uncommon instances, an accountant might provide inaccurate information or submit incorrect accounts, leading to missed payment deadlines or the imposition of penalties and fees.

Almost every business owner or director faced with such a mishap understandably wants to attribute all liability to the accountant who made the initial mistake. After all, they’ve been compensating the accountant to guarantee the company’s accounts are managed accurately.

Even though you hire an accountant to handle your company’s accounting duties, HMRC will assert that the director of the company is legally accountable for ensuring the accuracy of the company’s information when submitting tax returns or other statutory filings to HMRC.

Therefore, the company itself is responsible for any taxes, fees, or interest accrued as a result of the errors made by its designated accountant. If you neglect to settle these extra expenses, HMRC might eventually proceed to liquidate your company, potentially leading to its closure.

In simple terms, as the director of the company, you bear the ultimate responsibility for what is submitted to HMRC, not your accountant. If your accountant offers inadequate advice or submits incorrect accounts, HMRC will not hold them accountable for it.

What should you do if your accountant makes a mistake or gives you bad advice? 

The quickest and simplest solution to correct the issue would be to promptly contact HMRC and inform them of the situation. They might offer an extended deadline or arrange a special payment plan (referred to as Time to Pay) if you’re unable to pay the entire amount owed in one go.

You might also want to think about engaging a new accountant to provide a second opinion and conduct a comprehensive audit of your accounts.

The response to this query will vary depending on several factors, such as:

  • If the accountant has acknowledged making the mistake, then you have sufficient evidence to pursue a claim against them in court and request compensation for any extra fees or interest resulting from their admitted error.
  • If you haven’t paid HMRC the additional amount you owe them in fees/interest, chances are the Court might not uphold your claim because technically, you haven’t lost the funds you’re attempting to sue your accountant for.
  • If your accountant does not have professional indemnity insurance, you could still sue them, but the likelihood of obtaining compensation is considerably lower.

Lastly, if your accountant makes a mistake on your accounts, leading to additional money owed to HMRC, compensation is possible. 

However, if the accountant lacks professional indemnity insurance or is unwilling to file a claim against their insurance to cover the cost, you must first settle what you owe HMRC (or arrange an extension/payment plan). 

Afterwards, you would need to take the accountant to court to obtain a judgment against them.

If you’ve recently discovered that your accountant has made errors on your accounts, it’s crucial to seek professional guidance promptly to evade the repercussions of such mistakes. Contact our team today for free and confidential assistance.

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Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.