Professional Negligence Dispute Accounting Expert
Professional negligence claims against accountants, tax advisers, and other financial professionals require expert evidence on the quantum of loss caused by breach of duty. The dispute accountant constructs a but-for counterfactual, what the claimant's financial position would have been had the defendant performed the retainer competently, and compares it to the actual outcome. Typical cases include negligent audit opinions, defective tax planning, failure to identify fraud, and errors in management accounts or forecasts relied upon in transactions.
The SAAMCo principle (South Australia Asset Management Corp v York Montague Ltd [1997] AC 191) limits recoverable damages to loss within the scope of the defendant's duty. Where the professional provided information rather than advice on a specific transaction, liability may be limited to the additional loss caused by the information being wrong, not all losses flowing from the transaction. The accounting expert must address SAAMCo at the outset, identifying which categories of loss fall within and outside the scope of the retainer and quantifying each appropriately.
Where loss depends on the hypothetical action of a third party, whether HMRC would have assessed differently, whether a lender would have advanced funds, or whether a transaction would have completed, the Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 loss of chance approach applies. The expert quantifies the lost opportunity as a percentage probability multiplied by the full value of the opportunity, distinguishing past events (balance of probabilities) from future contingencies (reasonable probability threshold). Reports support claims in the High Court, professional indemnity insurer resolutions, and arbitration.
Frequently Asked Questions
What does a dispute accountant do in an accountant negligence claim?
The dispute accountant quantifies the financial loss caused by the defendant accountant's breach of duty, typically by constructing a but-for analysis of tax liabilities, transaction outcomes, or financial statements that would have resulted from competent work. The expert reviews the engagement letter, working papers, correspondence, and industry standards; identifies what was done incorrectly; and calculates the difference between the claimant's actual position and the position they would have been in but for negligence. The report addresses SAAMCo, mitigation, and any alternative causes of loss raised by the defendant, and complies with CPR Part 35 for court proceedings.
What is the "but-for" position in accountant negligence?
The but-for position is the counterfactual financial outcome if the accountant had performed the retainer competently, for example, the tax liability that would have been assessed on a correct return, the audit opinion that should have been issued, or the financial statements that should have been prepared. The expert compares this counterfactual to what actually happened and quantifies the net loss attributable to the breach, after deducting any amounts the claimant would have lost in any event. The but-for test is applied separately to each head of loss and must be supported by documentary evidence and reasonable assumptions explained in the expert report.
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