Professional Advice Can Be Taxing - Don't Sweat It

When a professional provides negligent advice they may be liable for consequent loss. But is the professional liable for the distress caused by their negligent advice? Clark v Turnbull [2017] CSOH 4 says that they're not. Distress is only a valid head of claim where the purpose of a contract was to provide pleasure or peace of mind.

The pursuers in this case are brothers. They sought the advice of the defenders, a firm of chartered accountants, on their capital gains tax liabilities arising from the sale of flats. They were incorrectly advised the CGT would be between £40,000 and £50,000. They sold the flats. In fact the CGT liability was around £150,000.

The brothers sought damages for the losses suffered. This included the increased CGT incurred; transaction fees; and late payment surcharges. They also sought damages for the distress they suffered when they discovered they faced a larger tax bill.