It's one of the questions clients ask most often once an HMRC enquiry has run its course and the penalty notice has landed: my accountant told me this was fine, can I get my money back from them? Sometimes, yes. Often, the honest answer is more fact-sensitive than clients expect, and understanding the difference matters before spending money pursuing a claim.
The three things you have to prove
A professional negligence claim against an accountant or tax adviser rests on three elements, and a claim can fail on any one of them even where the other two are clearly made out. First, a duty of care. Under the foundational authority of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, a duty of care for negligent advice can arise in tort even without a contract, wherever a "special relationship" exists, generally straightforward to establish where a formal engagement letter or retainer exists, and often arguable even without one where advice was genuinely relied upon in a professional context. Second, breach of that duty, meaning the advice given fell below the standard of a reasonably competent professional in the adviser's position, judged against the state of the law, HMRC guidance, and generally accepted practice at the time the advice was given, not with the benefit of hindsight once a problem has crystallised. Third, causation and loss, meaning the breach actually caused a quantifiable financial loss, which in a tax context typically means the penalty itself, additional tax that would genuinely not have been due had correct advice been given, interest, and the reasonable costs of dealing with the resulting HMRC enquiry or dispute.
HMRC's "carelessness" finding is not the same question
A point that causes real confusion: HMRC's own penalty framework asks whether the taxpayer took reasonable care, and specifically, where an agent was relied upon, whether the taxpayer appointed a competent agent, gave them accurate and complete information, and had no reason to doubt the advice received. This is a question about the taxpayer's own behaviour, not a finding about the adviser. A taxpayer can be excused a penalty personally, on the basis that they reasonably relied on a competent professional, while a separate professional negligence claim against that same professional, for having actually given negligent advice, remains entirely viable. Conversely, HMRC finding a taxpayer personally careless (for example, because they withheld relevant information from their accountant) does not automatically mean the accountant was blameless, though it will very likely weaken any negligence claim by undermining the causation argument, if the accountant was never given the information needed to advise correctly, the accountant's advice was not the cause of the resulting problem.
Situations that commonly do, and don't, support a claim
Claims tend to be strongest where an adviser gave advice contrary to clear, settled law or established HMRC published guidance available at the time, failed to advise on a well-known relief, election or time limit a competent adviser in that specialism would routinely have flagged, or made a straightforward calculation or filing error unconnected to any genuine legal uncertainty. Claims tend to be weakest, and are often not viable at all, where the adviser took a properly reasoned position on a genuinely uncertain or evolving area of law that HMRC later successfully challenged, where the client failed to provide accurate or complete information the advice depended on, or where the underlying tax was, in truth, always going to be due regardless of the advice given, meaning there is no real quantifiable loss caused by the advice itself, only the loss of an outcome that was never legally available.
How this typically plays out
A small business owner is advised by their accountant to claim a relief the accountant describes as "definitely available," without qualification or reference to any uncertainty, based on a misreading of the qualifying conditions that a competent specialist in that area would have identified correctly. HMRC opens an enquiry, disallows the claim, and charges a careless-inaccuracy penalty. Because the client can show they gave the accountant full and accurate information, relied reasonably on unequivocal professional advice, and the underlying legal position was, in fact, reasonably clear and simply misapplied rather than genuinely uncertain, HMRC accepts the client took reasonable care and mitigates the personal penalty position substantially. Separately, armed with the accountant's own written advice and the objectively clear qualifying conditions the accountant got wrong, the client has a credible basis to pursue a professional negligence claim to recover the additional tax, interest and costs the negligent advice caused.
The time limit
Claims for professional negligence must generally be brought within six years from the date the cause of action accrued, ordinarily when the negligent advice caused loss, under the Limitation Act 1980. Because the loss from bad tax advice frequently only becomes apparent once HMRC opens an enquiry, which can happen years after the advice was actually given, working out precisely when the clock started, and whether any extended date-of-knowledge provision might apply where the negligence was not and could not reasonably have been discovered earlier, is often a genuinely difficult question in its own right, and one worth taking specific advice on rather than assuming a claim is time-barred simply because the original advice was given long ago.
What to do if you think you have a claim
Gather the original engagement letter or retainer, the specific advice given (in writing wherever possible), and the correspondence and outcome of the HMRC enquiry that followed. An early, honest assessment of whether the advice was genuinely negligent, as opposed to simply advice that did not survive HMRC's later challenge, will save considerable wasted cost, and is generally worth obtaining before committing to a formal claim, particularly given the genuine complexity around limitation and the need to show the underlying loss would not have arisen but for the negligent advice.
Related guides in this series
- Reasonable excuse: the complete guide
- Best judgment assessments: missing or incomplete records
- Schedule 24 penalty framework (practitioner analysis)
- Self-assessment enquiry: full guide
- Hedley Byrne v Heller [1964] AC 465
Frequently asked questions
Can I claim against my accountant if their advice led to an HMRC penalty?
Potentially, if you can show a duty of care, breach of the standard reasonably expected of a competent professional, and a quantifiable resulting loss. Not every unwelcome tax outcome is negligence; the advice must have fallen below what a reasonably competent adviser would have given at the time.
Is HMRC's finding that I was "careless" the same as my accountant being negligent?
No. HMRC's test asks whether you personally took reasonable care, including relying reasonably on a competent agent. A professional negligence claim asks whether the accountant themselves fell below the standard of a reasonably competent adviser, a related but genuinely different question.
How long do I have to bring a claim against my accountant?
Generally six years from when the cause of action accrued, under the Limitation Act 1980. Because tax negligence often only surfaces once HMRC enquires, sometimes years later, working out exactly when the clock started can be genuinely complex and is worth specific advice.
What do I actually need to prove to win a negligence claim against my accountant?
Duty of care (usually straightforward), breach (advice fell below a reasonably competent standard at the time), and causation/loss (the penalty, extra tax, interest and reasonable costs the negligent advice actually caused).