Accounting Firm Cleared in Danish Tax Criminal Case. DKK 4 Million Fine Risk Removed

The accountant had not received the necessary information from the client

The central question was whether the accounting firm had acted with intent or gross negligence in reporting the erroneous information.

We argued that the audit client had not to a sufficient extent provided the necessary accounting and bookkeeping information to the accountant.

The accounting firm had therefore made the reports on the basis of the material made available by the client, and to the best of its ability.

The fact that the information subsequently turned out to be deficient or misleading could not, in our view, in itself lead to criminal liability for the accounting firm.

The Criminal Case Unit agreed

After a lengthy meeting with the Danish Tax Agency's Criminal Case Unit, it was accepted that the accounting firm had acted neither with intent nor with gross negligence.

There was therefore no basis to uphold the charge of tax evasion or aiding it.

The charge was therefore dropped, and the case against the accounting firm was closed.

For the client, this meant that the risk of a fine of around DKK 4 million was removed.

An incorrect result is not necessarily criminal

The case shows an important difference between a report objectively turning out to be wrong and the adviser who made the report thereby also having acted criminally.

In a tax criminal case, an independent assessment must be made of the adviser's own actions, the knowledge the adviser had at the time, and the material the adviser had access to.

This applies not least to accountants and other professional advisers who, in their work, depend on the information and documentation that the client or customer provides.

Criminal liability for accountants and advisers

Cases concerning adviser liability can be particularly serious, because they may concern both the adviser's own work and the question of aiding a client's possible tax or duty evasion.

It is therefore important to clarify early on what information the adviser actually had, what the adviser could be expected to verify, and whether there is any basis at all for establishing intent or gross negligence.

If you, as an accountant, adviser or company, have received a notice of a liability case or a charge from the Danish Tax Agency's Criminal Case Unit, you are welcome to contact us for a confidential and non-binding assessment of the case.