A Scottish accountant whose firm is regulated by both ICAS and ICAEW is subject to two minimum-terms regimes simultaneously — and the broker who quotes only against one of them has not finished the job.
ICAS — the Institute of Chartered Accountants of Scotland — is the chartered body for Scottish accountants and the regulator that sets PI requirements for ICAS-registered practising firms through the ICAS Public Practice Regulations. The minimums are broadly aligned with ICAEW’s and ACCA’s, but there are differences in detail. More importantly, Scottish accountants who pursue work for Scottish clients work under the Prescription and Limitation (Scotland) Act 1973, not the English Limitation Act 1980 — and that changes how PI claims are notified, defended, and reserved. This guide is for Scottish accountancy practices and for English-registered firms whose Scottish clients now make Scottish prescription law part of their exposure profile.
Two threshold questions decide what a Scottish accountancy firm needs to buy.
First, regulatory cross-registration. A firm with at least one practising principal in ICAS is regulated by ICAS for those principals. A firm with at least one practising principal in ICAEW is also regulated by ICAEW for those principals, and the same applies to ACCA. Where principals span more than one body, the firm is regulated by each — and PI cover must satisfy the highest applicable minimum on every measure. In practice this means:
Second, jurisdiction of clients. A Glasgow firm whose clients are mostly Scottish has a claims profile dominated by Scottish prescription. A firm based in Edinburgh but acting for English corporate clients on group audits or English tax matters has a hybrid profile: claims may be raised in either jurisdiction, and the relevant clock differs accordingly. Underwriters will usually price the higher-risk jurisdiction.
The substantive Scottish-law point — and the one most often missed at notification — is that under section 6 of the Prescription and Limitation (Scotland) Act 1973, an obligation to make reparation prescribes (is extinguished) five years from the date the loss arose, subject to the discoverability rule in section 11(3). The 20-year long negative prescription is an absolute cut-off. There is no precise English equivalent to the five-year short negative prescription; English limitation on professional negligence runs for six years from breach or, under section 14A of the Limitation Act 1980, three years from knowledge with a 15-year longstop.
Tax advisory work adds a further wrinkle. HMRC’s discovery powers and the assessment time limits operate independently of either prescription or limitation, so a client may have a live HMRC dispute long after the underlying advice has prescribed against the adviser. That gap is a genuine source of claims and should be factored into limit-of-indemnity modelling.
Scottish accountants’ PI policies are claims-made wordings governed by UK law, with insurers usually nominating English law and the English courts for the policy itself even where the insured services were performed in Scotland. That is normal — it does not exclude Scottish claims. What matters is that the policy responds to claims arising from professional services regardless of where the claim is raised.
The mechanics:
Where contracting out under section 16 of the Insurance Act 2015 appears, scrutinise. The clauses most often contracted out of are sections 11 (terms not relevant to actual loss) and section 14 (good faith). The buyer’s position is straightforward: section 11 protection is valuable; do not let it be contracted out without a real commercial reason and a real reduction in premium in exchange.
Aggregation — whether multiple related claims count as one claim against one limit — is decided under the policy wording. The Supreme Court’s decision in AIG Europe Ltd v Woodman [2017] UKSC 18 is the standard reference and applies regardless of jurisdiction. Scottish accountancy firms with portfolio exposures (similar advice to many clients, e.g. tax planning structures) should pay particular attention to the aggregation clause.
Consider a four-partner Aberdeen accountancy firm regulated by both ICAS and ICAEW. In 2021 they advise an oil services client on a £900,000 R&D tax credit claim. HMRC opens an enquiry in 2024 and disallows the claim in 2025, raising assessments of £1.1m including interest and penalties.
The client sues the firm in the Court of Session in early 2026 alleging negligent advice. Damage arguably arose in 2021 when the claim was filed; on that view the five-year prescription clock runs to 2026, which is tight but live. The discoverability rule in section 11(3) of the 1973 Act may extend it.
The firm carries £2m of PI cover with a £15,000 excess on a wording aligned to the higher of the ICAS and ICAEW minimums. They notified the circumstance in 2024 when HMRC opened the enquiry — a notification of circumstance, not yet a claim. That notification locks in the 2024 policy year as the responding policy.
Defence costs run to £140,000. The claim settles at £600,000 (the client’s net irrecoverable tax outlay, abated for contributory fault by the in-house team). The firm pays the £15,000 excess; insurers indemnify the balance.
Apex’s view: dual-regulated accountancy firms are the population most likely to be under-insured, because the standard quoting process picks up one regulator’s minimum and stops there. We have seen ICAS-only quotes used for ICAEW-regulated principals and vice versa. The fix is straightforward — map every principal’s registrations before going to market — but it has to be done at the firm, not assumed by the broker. Done well, it produces a programme that satisfies every regulator and gives the firm room to argue prescription on every Scottish file.
Case law: AIG Europe Ltd v Woodman [2017] UKSC 18 — aggregation of “related matters or transactions” under standard PI wordings.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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