Posted 21st August 2023 by ctatax-admin
The other week we heard a true story on Linkedin about an accountant who is now trying to sell his practice after his PI insurers refused to pay a negligence claim of nearly £250k.
Apparently this is because they believe that the accountant did not have sufficient expertise to advise on the issue he got wrong….
In the case in question, we don’t know if the accountant had previously advised on SDLT or if this was a one-off. That seems more likely if the insurers have refused to pay out on the negligence claim of around £250k.
What we do see however is accountants advising their clients superficially, or even dismissively, that Stamp Duty is due when it isn’t! Now it may be that they believe they are ‘helping’ their client by advising on a matter that they haven’t encountered before.
And doing so will make the advice more affordable than if they involve a specialist.
But it probably won’t be right of course!
The test in negligence cases is whether the accountant did all that a ‘reasonably competent’ accountant would have done.
These days, all ‘reasonably competent’ accountants can be expected to abide by the Guide to Professional Conduct in Relation to Tax (PCRT). That means the accountant getting:
– appropriate assistance for tax work that goes beyond their experience and expertise; and
– a second opinion whenever the accountant provides what they consider to be a significant opinion of their own.
In the current case the accountant gave advice on SDLT and caused their client to lose over £200k.
Either the accountant thought they had sufficient expertise – in which case they were negligent; or they failed to comply with PCRT – in which case their approach was not that of a reasonably competent accountant.
Sadly this is a pattern we see all too often repeated where a little knowledge often founded on mistaken assumptions is applied to the detriment of clients Stamp Duty positions and it’s not only accountants that get it wrong. Indeed in one case we managed to recover overpaid SDLT for an accountancy practise that had inadvertently overpaid their own tax!
Over the last three years we have recovered over £30 million in overpaid stamp duty where solicitors have made, in most cases, extremely basic errors when filling in SDLT return the failure to consider items such as residential or not?, multiple dwellings or not?, connected parties or not? Have led to a rising tide of negligence claims against solicitors and is threatening to break out into a full epidemic.
Read our FT Adviser feature: HMRC returns £30 million in overpaid stamp duty
Those dealing with law firms in these areas tell us that there is a 95% success rate in claims against solicitors and we are aware of several pending legal actions which may finally bring this issue into the public spotlight. This broadly mirrors the success rate we have had with refunds from HMRC So may well be a dependable statistic.
What is deeply concerning for professionals of all stripes is the insurers willingness to walk away from the PI policy on the basis of lack of requisite expertise. Clearly if you are not a specialist then you shouldn’t even consider giving any advice as your as your Professional Indemnity may not cover you.
If you’re a client seeking that advice you could end up dealing with a professional who is not insured and may be unable to compensate you if they get it wrong!
At Cornerstone Tax SDLT refunds we have over 17 years experience in stamp duty land tax we are the leading specialists in the UK on all matters property tax if we can help you before you buy or do a review to see if you have overpaid please get in touch.