As I said i am happy to pay the tax due - the 9000 is made up of Interest and penalties.The initial underpayment was quite small
This doesn't really add up, unless the error was made maybe 10 years ago. Statutory interest is approx 10%-12% p.a. (cant remember which, offhand) and takes many years to gross up a liability from a small liability to a big one - certainly more than the 4 years you mention (2002-2006).
The issue of penalties on top of the interest should only be an issue if you have been formally audited by Revenue. Again the max penalty for "deliberate default" is 100% of the tax, and this is normally subject to mitigation, and/or significant reduction where the offence is downgraded to one of "gross carelessness" or "insufficient care"
but as I was a director of her company I was penalised by 10% of my earnings ! Doesnt seem fair but that seems to be the formula.
This appears to be the 10% surcharge on late- or non-filing of your directors tax return. This surcharge is indeed incredibly harsh, as it is applied on your total tax liability on all income from all sources (including PAYE income). Because of its harshness, Revenue often choose not to apply it to the letter in individual cases (at least in full). I would also count it as very rare for interest to be applied on the surcharge itself, which is why your story puzzles me. That said, filing your tax return is your responsibility, and it is generally difficult to evade this responsibility by trying to pin this on an accountant or someone else.
I am currently suing the accountant as he has absolved himself of any responsibility.
Again, its not at all clear whether the accountant has any responsibility for what has happened. Remember, the whole problem has been triggered by your own action in filing a tax return over 3 years late. In general, threatening to sue somebody is not the best reaction to such a problem arising. You would have been much better off working with the accountant to try to persuade Revenue to waive the late filing surcharge,
if this is the root of the problem. (its hard to tell based on the limited and apparently contradictory information you have given).
I am alarmed that you seem to have cut off your nose to spite your face by attempting to sue before you have even explored the possibility of having the surcharge and/or other penalty cancelled in the first instance.