Successful Representation of a Client’s Interests in a Dispute Concerning the Recovery of Damages Arising from the Substandard Provision of Accounting Services

Background

In November 2020, the parties entered into a contract for the provision of accounting services, under which the service provider undertook to maintain accounting and tax records, as well as to prepare and submit the client’s tax declarations. During the period of service provision, the service provider prepared and filed VAT and corporate income tax declarations.

However, in 2025, the tax authority identified errors in the tax declarations filed for 2023–2024. As a result of the audit, the taxpayer was assessed additional tax liabilities and charged penalties for the late payment of taxes.

Following the discovery of the violations, the client terminated the contract with the accounting company and demanded the transfer of accounting documentation and records. However, the service provider failed to deliver the relevant documents and accounting database. As a consequence, the client was compelled to engage a separate audit firm to restore the accounting records for the period 2020–2023.

On the grounds that the aforementioned costs had arisen as a result of the service provider’s improper performance of its obligations, the client filed a claim with the commercial court seeking recovery of damages in the form of the penalties assessed by the tax authority and the costs of restoring the accounting records.

The REVERA Team

REVERA attorneys constructed a legal position grounded in the classical framework of civil liability and presented evidence of:

• the fact of loss (penalties + costs of restoring accounting records);
• improper performance of obligations by the accounting company;
• a direct causal link between the errors in the reporting and the additional tax assessments;
• the fault of the service provider as a professional market participant.

Particular attention in the case was devoted to the evidentiary basis, including materials from the tax authority which confirmed errors in the calculations and completion of the tax declarations.

Outcome

The court granted the Client’s claims in full and ordered the recovery of damages in their entirety. In addition, legal costs were awarded in the Client’s favor in full.

Conclusion

This case illustrates several important practical takeaways:

1. An accounting company bears liability for the quality of the services it provides and is obliged to compensate for losses where errors in tax accounting result in financial damage to the client.
2. The court confirmed the possibility of recovering from the service provider the amounts of penalties assessed by the tax authorities, where such penalties arose as a consequence of the service provider’s errors.
3. Where an accounting company fails to transfer documents or loses accounting data, the costs of restoring such records may be recovered from it as actual damages.
4. The key element in disputes of this nature is establishing that it was precisely the actions of the service provider that caused the client’s losses. In such cases, supporting documentation from the tax inspectorate can persuade the court of the existence of a causal link.
5. The terms of the accounting services agreement are also of significance. In examining the dispute, the court takes into account the contractual provisions defining the scope of the service provider’s obligations and the allocation of liability between the parties. The inclusion in the contract of an express provision obligating the service provider to compensate for fines and penalties assessed as a result of errors in tax accounting substantially strengthens the client’s position.

Author: Aliaksei Fedarovich, Pavel Klementsov.

REVERA continues to handle complex disputes where success requires not only legal knowledge, but also the ability to build a strategy that delivers tangible results.
The client’s interests in the court proceedings were represented by an advocate of the Minsk City Bar Association.