Successfully represented a client in a civil case concerning years of improper accounting services

The court fully upheld the claim, awarded all requested damages, and ordered the former service provider to hand over accounting documents.

⚖️ The situation:

Our client faced serious consequences due to a long-standing accounting service agreement that was not performed properly:

🔹 No financial statements had been submitted to the Centre of Registers since 2018;
🔹 Incorrect profit, VAT reports, and tax declarations were submitted for years, resulting in penalties and tax debt;
🔹 Ultimately, the Centre of Registers initiated the client’s forced liquidation procedure;
🔹 A new accounting firm had to be hired to retrospectively rectify the accounting records.

Although we successfully challenged the liquidation in court, the service provider consistently avoided responsibility, leaving no choice but to initiate legal proceedings.

After a typically lengthy litigation process, the court concluded that:

🔹 The accounting provider unlawfully failed to fulfil contractual obligations – they did not properly manage the accounting and refused to hand over documents even after contract termination;
🔹 The resulting damages – including penalties from the Tax Authority, additional accounting service fees, costs related to the annulment of the liquidation procedure, and pre-litigation expenses – were deemed valid and compensable.

✅ What should businesses know?

1. Service providers are liable not just for filing declarations but also for their accuracy
   If financial declarations contain errors caused by the accountant, not the client, the business has grounds to claim damages.

2. Termination of the agreement does not remove the obligation to transfer documents
   By law and contract, an accountant must return all documents. Unjustified delay or refusal may result in financial harm and legal liability.

3. The company director must organise accounting but is not automatically liable for the accountant’s mistakes
   The court clearly distinguished between the director’s responsibilities and the accountant’s professional obligations.

4. Improper accounting can lead to forced liquidation
   Failing to maintain proper accounting records may result in severe consequences – in our client’s case, the company faced forced liquidation, which can only be reversed through court proceedings.

✅ Recommendations for businesses:

1. Clearly outline in the agreement the specific responsibilities of the accountant, the company, and its director, depending on the intended allocation of liability. Include a clear mechanism for the transfer of documents.

2. Audit the quality of accounting services at least once a year. If you notice deficiencies – document them in writing and act promptly.

3. If financial damage has already occurred, don’t hesitate to protect your interests – first with the service provider directly, and if needed, through the courts.