What do you do when your accountant makes a mistake?

Who is liable for accountant mistakes?Liabilities of accountants for poor or mistakes in your accounts can arise from various reasons. Most often, these mistakes occur due to human error, misunderstanding of accounting principles, or misinterpretation of financial statements.

In such cases, the accountant may be held liable for the loss or damage caused by their errors.

Accountants can also be held liable for intentional acts, such as fraud or embezzlement. If an accountant deliberately misleads you regarding your financial status or misuses your funds, they may be held accountable for the full extent of the damages incurred.

It is important to choose an accountant who is reputable and knowledgeable to reduce the likelihood of these types of errors and to ensure the accuracy of your financial records. Additionally, having a strong internal control system in place and regularly reviewing your financial statements can also help mitigate these risks

If your accountant makes a mistake, who’s liable?

In general, the accountant is liable for any mistakes made in their professional capacity. If an error or omission results in financial loss or damage to the client, the client may take legal action against the accountant for compensation. The degree of liability may depend on the circumstances of the case, such as the level of care and expertise used by the accountant, and whether the error was intentional or due to negligence.

Additionally, in some cases, the accounting firm that employed the accountant may also be held responsible for their actions, especially if the mistake was a result of inadequate supervision or training provided by the firm. It’s important to note that clients should take steps to protect themselves by choosing a reputable and qualified accountant and regularly reviewing their financial records.

Speak with your accountant

When encountering a discrepancy in your financial records, it’s crucial to communicate with your accountant to gain a better understanding of the situation. They may be able to provide a reasonable explanation or a quick solution to the issue, so there’s no need to panic. A competent accountant should be able to communicate effectively and promptly address any concerns you may have.

If, after speaking with your accountant, the issue remains unresolved, the next step is to file a formal written complaint. Most accounting firms are obligated to have a complaints procedure as part of their ethical code, and they must take responsibility for addressing any problems that arise. By taking these steps, you can ensure that the issue is resolved in a timely and satisfactory manner.

Notify HMRC

If you’re aware of an error in your accounts, it’s important to reach out to HMRC as soon as possible. HMRC tends to be more forgiving towards individuals who voluntarily disclose mistakes, as opposed to waiting for the error to be uncovered or trying to conceal it. This proactive approach will be taken into account when determining penalties, which can help reduce potential fines.

HMRC can assist in resolving the issue by offering practical solutions. For instance, if the error has caused a tight deadline for filing your return, they may grant an extension. If you owe additional tax, you may be able to negotiate a payment plan with them. By being open and honest, you can work with HMRC to resolve the problem in the most favorable way possible.

Taking further action

If you believe your accountant’s services have not met your expectations, you may consider filing a complaint with their professional organisation. If their service was inadequate and resulted in financial loss, and if previous attempts to resolve the matter have gone unanswered, you may be able to take legal action for professional negligence.

Membership in professional organizations such as the Institute of Chartered Accountants in England and Wales (ICAEW) or the Association of Chartered Certified Accountants (ACCA) often requires the accountant to have professional indemnity insurance, which covers the cost of compensating clients for mistakes.

You may also want to consider hiring a new accountant to give you a second opinion and conduct a thorough audit of your accounts.

The answer to this question will depend on several factors, including:

  • Whether the accountant has admitted to making the mistake – If they have then you have all the proof you need to file a claim against them in Court and demand compensation for any additional fees or interest you incurred due to their admitted mistake.
  • Have you already paid HMRC all that you owe them in taxes? – Since you technically have not yet lost the money you are attempting to sue your accountant for, the Court is unlikely to honour your claim if you have not paid HMRC the additional amount you owe (in fees/interest).
  • Does your accountant have professional indemnity insurance? – You could still bring a claim against your accountant even if they don’t have insurance, but your odds of winning are substantially smaller.

HMRC may not always see it this way, though, as you are legally obligated to ensure the correctness of your company’s self-assessment when you file taxes, and you pay your accountant to do it on your behalf.

Therefore, any taxes, fees, or interest imposed as a result of the chosen accountant’s error are the responsibility of the company itself. HMRC may eventually take action to wind up your firm and put it out of operation if you fail to pay these additional expenses.

Although you can pursue a legal claim regardless of insurance coverage, having insurance increases the chances of receiving compensation ordered by a court. It’s important to note that an admission of error by the accountant can be used as evidence in court proceedings. Before taking any legal action, it’s also crucial to settle any penalties owed to HMRC. Seeking professional advice is recommended as legal proceedings can be costly and complex.

Frequently asked questions

Can I sue my accountant for negligence UK?

Yes, you can sue an accountant for negligence in the UK. As is the case with most compensation cases, there is a time limit within which you need to make an accountant negligence claim. Typically, this is six years from the date of the negligent advice or action that resulted in your financial loss.

Can an accountant be liable?

Yes, an accountant can be liable for any misstatements that occurred while auditing and preparing financial documents for a client. Because accountants are held responsible for any inaccuracies and as a result can face legal charges or monetary losses, they often take out professional liability insurance.


When your accountant makes a mistake, it’s important to take a systematic approach to resolve the issue. The first step should be to communicate with your accountant to gain a better understanding of the situation and see if there is a reasonable explanation or an easy solution to the issue. If the issue remains unresolved, you may consider filing a formal written complaint with their professional organization.

If the mistake has caused a financial loss and previous attempts to resolve the matter have been ignored, you may be able to take legal action for professional negligence. However, it’s important to consider the cost and complexity of legal proceedings before taking action and seek professional advice if necessary. Additionally, it’s important to settle any penalties owed to HMRC before pursuing legal action.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.