Can an employee be sued for an error which has resulted in loss of earnings to the co

Can an employee be sued for an error which has resulted in loss of earnings to the company? Obviously you can be fired for negligence or incompetency but can you also be held financially liable?

Some background - i'm an accountant and it's a tax issue. Due to wrong interpretation of tax law we didn't collect tax from certain customers. It is too late to collect this now but we will have to pay it to the tax authorities, which will represent a loss of earnings to the company.

Can I be held liable for this money?

Please clarify are you :

1. Accountant employed in private company as employee(one company) or

2. Accountant employed by a practice as an employee(work on many jobs). If practice is their letter of rep and engagement

Are you director in any case above

You might also explain the tax issue and how much involved? eg vat/ rct.

As as employee I would doubt you could be liable, also check insurance/indemity cover to see can company make a claim

What has your employer said to you about it.



Also contact you accounting institute in confidence for advise

Thanks for replying. I'm an employee in a private company, not in practice.

I don't want to go into too much detail in case I can be identifiable. It's a VAT issue, based on a misinterpretation of VAT rules. My employer hasn't said anything yet, we are still investigating to find out the extent of the problem. I don't know the final amount yet but it could be substantial.

I've checked my contract and there is no liability clause in it.

I would make a private call to accounting institute technical/ethic dept to put your mind at rest.

I would not be to well up on law but think it highly unlikely you could be held finacially liable as long as you acted in good faith.

If a person in a position like yours could be held laible- no one would ever take a job in accountancy as an employee.

In regard to vat issue- About argueing now with revenue to reduce liablity. Look at ways or re-invoiceing etc. or contacting customers involved and see what can be done

Be worth seeming what employer insurance covers.

Thanks very much for taking the time to reply and for your advice, papervalue

Hopefully we'll get this sorted out over the next few weeks

Hi Jane.

Sorry to hear about this.

Can you give some detail in relation to the issue (but change the numbers, the sector and the people involved)?

I suspect it's one of 2 things:

1. Non-collection of VAT through incorrectly identifying certain jobs as being subbie-related

2. Non-collection of VAT through incorrectly invoicing overseas customers

Very common errors in my experience.