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Accountants’ Negligent Tax Advice Caused No Loss

A company which received negligent tax advice has nevertheless had its hopes of multi-million-pound compensation dashed after the High Court ruled that it had suffered no loss as a result of a leading accountancy firm’s breach of duty.

The dispute arose in the context of the amortisation of goodwill worth about £26.5 million following a corporate acquisition. The company argued that, had it been properly advised by its accountants, it would have restructured itself in time to take full advantage of changes in the law and greatly mitigate its tax liabilities.

The accountants admitted breach of duty in failing to advise the company of the consequences of changes to the Corporation Tax regime. The Court also accepted that, had the restructuring been implemented, substantial tax advantages would probably have been achieved. Nevertheless, in dismissing the company’s claim, the Court found that it had failed to establish that it would in fact have carried out the restructuring had it received appropriate advice.