Professional Negligence Claims Against Accountants – Liverpool
Mark Cawson QC
Negligence Claims Against Auditors: The Key Ingredients of a Claim and Recent Developments
This talk will consider the necessary requirements of a good claim in negligence or for breach of statutory duty against auditors.
It will consider the various ingredients of a good cause of action by reference to the leading authorities and recent case law developments, including:
- Scope of duty: Duty to the company, shareholders and third parties. Claim by company in liquidation in respect of trading losses. Possible effect of the decision of the Supreme Court in BPE v Hughes Holland  UKSC 21.
- Standard of Duty: The appropriate test. Use of expert evidence and standards of accounting practice.
- Breach: Planning control and recording, internal accounting and control systems, reporting.
- Causation and Remoteness: Effective cause of loss. Break in chain of causation. Impact of ex turpi causa principle in cases of failure to detect fraud, and the status of Moore Stephens v Stone & Rolls  AC 1391 in the light of Bilta (UK) Ltd (in Liquidation) v Nazir  AC 1 and Patel v Mirza  3 WLR 399.
- Damages: Basic measure. Particular issues.
Tax-Related Professional Negligence: Key Elements and Recent Case Law
In recent years the tax code has become more complex, a harsher penalty regime has been implemented, and HMRC have made extensive efforts to combat ‘aggressive’ tax avoidance schemes. Unsurprisingly, there has been a steep rise in the number of professional negligence claims against accountants and other providers of tax advice. This seminar outlines the key elements of such claims and the recent case law relating to them:
- Scope of duty: Duty to advise on tax consequences of commercial transaction (Swain-Mason v Mills & Reeve)? Duty to give ‘specialist’ rather than ‘general’ tax advice (Mehjoo v Harben Baker)?
- Breach of duty: Advice within range of reasonable professional opinion (Baker v Baxendale-Walker)? Duty to advise on risk of challenge by HMRC (Dhillon v Siddiqi)?
- Causation/loss: Would client have heeded correct advice or adequate warning (Baker)? Scope for ‘loss of chance’ analysis (Altus Group v Baker Tilly)?
- Limitation: Does time run from the date of the tax assessment or the date of the underlying liability (Integral Memory Plc v Haines Watts)?
- Mitigation: Reasonable to settle with HMRC (BP plc v AON (No2))?
Identifying the Correct Claimant in an Accountant’s Negligence Claim
“The distinct legal personality of companies has been a fundamental feature of English commercial law for a century and a half, but that has never stopped businessmen from treating their companies as indistinguishable from themselves. Mr Michael Hunt is not the first businessman to make that mistake, and doubtless he will not be the last.”
In the recent Supreme Court case of Lowick Rose LLP (in liquidation) v Swynson Ltd  UKSC 32 a central theme was the question of whether a businessman (Mr Hunt) who loaned monies to a third party to refinance loans which were made by his company to that same third party in reliance on negligent accountants’ advice could recover from the accountants. As might be inferred from the opening lines of Lord Neuberger’s judgement in Lowick Rose the appeal did not end well for the Claimants.
This talk seeks to examine the concepts of transferred loss and reflective loss, which frequently determine who is the correct party to a claim where loss is suffered by both a company and its shareholders and which the subject matter of accountancy practice makes particularly relevant to claims against accountants.
Coffee, breakfast and registration will be held between 08:00 – 08:30 with the talks finishing at 10:00. If you have any specific dietary requirements, please let us know.
If you would like to reserve a place, please do not hesitate to contact Jo Stapley.