TaxCorporate TaxNegligence claims on the rise

Negligence claims on the rise

The profession is hit by a rise in claims for negligent tax and audit advice

In a survey by Alexander Forbes International, claims and notifications
against professionals rose sharply, climbing to 603 in 2005-06, from 452 a year
earlier.

Taxation claims were the highest in proportion to others, up to 27.2% from
25.6%, while audit negligence claims also rose, from 1.9% to 3.8%. Tax and audit
claims together increased by 50%, from 124 to 187.

Despite the growth in claims in audit and tax, the biggest surge was for
incorrect endowment advice, which rose to 20% from 12.3%.

‘An increasing number of home owners are finding that their endowment
policies will fail to pay off their mortgages and they are seeking recompense
from their accountants for negligent advice. This has been compounded by a
number of specialised claims farmers who have made a business of encouraging
home owners to seek compensation from their advisers,’ said executive director
Mark Bracher.

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