What to do if your accountant makes a mistake

If your accountant makes a mistake, deal with HMRC first, because you remain responsible for your own tax even when someone else prepares the return. Then raise a written complaint with the firm, and if that fails, go to their professional body or take legal advice about a claim. Move quickly: HMRC penalty appeals usually have a 30-day limit.

Who is responsible for the mistake?

You are responsible to HMRC; your accountant may be responsible to you. HMRC’s Compliance Handbook at CH81125 says that when you rely on someone else, HMRC expects you to take reasonable care to check what they give you.

If you did take reasonable care, HMRC says you are not liable to a penalty for that inaccuracy, even though the return was wrong. If you signed a return without reading it or asking how the figures arose, HMRC is likely to treat the error as careless. Either way, any extra tax due is still yours to pay.

Common accountant mistakes

The errors clients most often face are:

• Missed deadlines: a late Self Assessment, VAT or Company Tax Return, or late Companies House accounts
• Wrong figures: income left out, expenses claimed that are not allowable, or a calculation error
• Wrong advice: for example on IR35, VAT registration or how to take money out of a company
• Missed claims: reliefs or allowances that would have cut your bill
• Payroll errors: wrong PAYE or late Real Time Information submissions

What to do, step by step

1. Get the facts in writing. Ask the accountant to explain what went wrong, when, and the cost.
2. Correct the error with HMRC. Amend the return or make a disclosure. Correcting quickly can reduce any penalty.
3. Pay what is due. Interest runs on late tax whoever caused the error. If you cannot pay in full, ask HMRC about a Time to Pay arrangement.
4. Appeal any penalty within 30 days. See below.
5. Raise a formal complaint with the firm. Use its complaints procedure, set out what you want (a refund, a fix or compensation) and keep copies.
6. Escalate to the professional body if you are not satisfied with the response.
7. Take legal advice if you have lost money and want compensation.

Can you appeal an HMRC penalty caused by your accountant?

Often, yes. GOV.UK’s list of reasonable excuses includes “you relied on someone else to send your return, and they did not”. It also says making a mistake on your return is not a reasonable excuse in itself.

You usually have 30 days from the date of the penalty to appeal. If HMRC does not change its decision, you can ask for a review or take the appeal to the tax tribunal. For contact details, see the HMRC Self Assessment helpline.

How to complain about your accountant

Start with the firm. Professional bodies expect you to give it a chance to put things right.

Check which body regulates your accountant on their letterhead or website, or with our guide to checking an accountant is qualified. Tax advisers who belong to the CIOT or ATT are dealt with by the Taxation Disciplinary Board.

ICAEW. You complain through ICAEW’s online form, in your own words. ICAEW investigates professional misconduct and breaches of its Code of Ethics. It cannot resolve fee, contractual or commercial disputes or civil claims, and it has no general compensation scheme.

ACCA. You send the ACCA complaint form with your evidence to complaintassessment@accaglobal.com, or call +44 (0)20 7059 5534 if you cannot use email. ACCA may offer its free Conciliation Service, but it does not decide what a fair fee is and does not award compensation.

Unqualified accountants. Anyone can call themselves an accountant. If yours does not belong to a professional body, your routes are the firm’s own complaints process and the courts.

Can you claim compensation?

Yes, if the accountant was negligent or broke your contract and you lost money as a result. Professional bodies cannot award compensation, so this is a civil claim, usually settled through the firm’s professional indemnity insurance.

You must act in time. Under the Limitation Act 1980, section 14A, a negligence claim must be brought within six years of the damage, or three years from when you knew enough to bring a claim, if that is later. Section 14B sets an overall limit of 15 years from the negligent act. ICAEW advises not to wait for its own process to finish before taking legal advice.

Which applies to you?

• If you got a late filing penalty because the accountant did not file, appeal to HMRC on reasonable excuse grounds.
• If the return was wrong, correct it, pay the tax, and ask the firm to cover any penalty and interest.
• If you lost money through bad advice, complain to the firm, then take legal advice.
• If you have lost trust, see how to switch accountants and the red flags to look for in the next one.

Frequently asked questions

Am I responsible if my accountant makes a mistake on my tax return?

Yes. You are responsible to HMRC for your return and any tax due. HMRC may not charge a penalty if you took reasonable care, and you may be able to recover your losses from the accountant.

Is my accountant’s mistake a reasonable excuse for HMRC?

It can be. GOV.UK lists relying on someone else to send your return, when they did not, as a possible reasonable excuse. A mistake on the return is not an excuse in itself.

How long do I have to appeal an HMRC penalty?

You usually have 30 days from the date the penalty was issued. If you miss it, you must give HMRC a reason.

Can ICAEW or ACCA get me compensation?

No. Both can investigate misconduct and take disciplinary action, but neither resolves civil claims or awards compensation. You need legal advice for that.

How long do I have to sue an accountant for negligence?

Usually six years from the damage, or three years from when you knew about it if later, with an overall limit of 15 years under the Limitation Act 1980.