The law relating to limitation is complex and to analyse the topic in detail would take significantly more space than is available in this division.
It is an important issue because if a claim falls outside the relevant limitation period, it is 'statute barred' and a defendant can seek to rely upon a 'limitation defence', which is an absolute defence to the claim regardless of any underlying merits which the claim might have. It is therefore a powerful weapon in the professional's arsenal.
Applicable limitation periods differ depending upon the cause of action being pursued. As we have seen, the most usual claims against tax advisers arise out of breach of contract or the tort of negligence:
(a) proceedings for breach of contract must be issued within six years from the date of the breach, which is the date when the cause of action in contract accrues. Where there is an active singular breach, this should be relatively easy to determine. However, when the breach is an omission, this can be harder to determine;
(b) for claims in negligence (apart from personal injury claims to which separate provisions apply), proceedings must also be issued within six years from the date when the cause of action accrues, but in negligence, this date is when the claimant suffers damage, which can be later than the relevant date in contract.
It can be difficult to determine the date when damage occurred, and we consider some instances of this below. Where it is a case
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