Resolving Tax Consultancy Disputes Effectively

Two disputes, two tracks, and why the order you take them in changes the outcome.

When an FTA assessment lands and the business blames its tax adviser, there are two disputes running at once. This article sets out why the challenge to the assessment has to come first, what the engagement letter decides about the professional claim, and where each is heard.

By Nour Attorneys / 23 August 2026

Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant

An assessment arrives from the Federal Tax Authority. The figure is larger than anyone expected, and the first conversation inside the business is not about the tax at all — it is about the adviser who prepared the return. Whose position was it? Who was given the underlying records? Who said the treatment was safe?

That is the shape of nearly every tax consultancy dispute in the UAE. There is a tax problem and a professional problem, they are usually handled by the same people at the same time, and doing so is a mistake. The two run on different tracks, and the order matters.

Deal with the Authority first

A claim against an adviser cannot be valued until the tax position is fixed. Until the assessment is final, nobody knows what the loss is — and a business that settles with its adviser early can find it has released the only party who might have funded the challenge.

The route against an FTA decision runs through the Authority's own process before it reaches a court: a request that the Authority reconsider its decision, then an objection to the tax disputes committee, then, if necessary, the courts. Each stage has its own requirements as to form, content and language, and the timetables are set by law and are short. A missed step is usually fatal regardless of the merits, which is the single most damaging thing that can happen in this area — the argument may be a good one and never get heard.

Two practical points follow. Diarise every deadline the moment a decision lands, and do not let an internal argument about responsibility consume the window for challenging the assessment.

What the engagement letter actually promised

When the professional claim does get made, it is decided almost entirely by the engagement terms. The questions that decide it are narrow:

Scope. Was the adviser engaged to prepare and file returns, to review a specific transaction, or to give general advice? Advice given on a defined question does not become a warranty about the whole business.
Inputs. Nearly every engagement is expressed to rely on information supplied by the client, without independent verification. Where the assessment arises because a document was never provided or a transaction was described inaccurately, that clause disposes of the claim.
Who filed. Responsibility for the accuracy of a return sits with the taxable person. An adviser who prepared it is exposed for the preparation, not for the statutory obligation, and the distinction matters when penalties are apportioned.
Standard of the advice. Advice that a position is arguable is not advice that it will be accepted. Disputes frequently turn on whether a caveat was recorded in writing or expressed only in a meeting.
Caps and exclusions. Most professional terms cap liability by reference to fees and exclude indirect loss. Whether the tax itself, as opposed to penalties and interest, is recoverable at all is a live question: the tax would have been payable on the correct treatment in any event.

Only a tax agent listed on the Federal Tax Authority's register may act for a taxable person before the Authority. Where a business believed it was represented and its adviser was not registered to act, that changes both the professional claim and how the underlying matter must now be run.

The substantive law the argument is about

Most current disputes concern one of two regimes. Corporate tax was introduced by Federal Decree-Law No. 47 of 2022 and applies to financial years starting on or after 1 June 2023, at 0% on taxable income up to AED 375,000 and 9% above that threshold. VAT is charged at 5% under Federal Decree-Law No. 8 of 2017, as amended by Federal Decree-Law No. 18 of 2022.

Advice given before corporate tax took effect is a recurring source of complaint, particularly where a structure was recommended on the basis that the UAE was tax-free. That was never a complete description and it is not one now. Free zone entities are within the corporate tax regime, and whether a particular entity and a particular stream of income qualify for preferential treatment depends on conditions that have to be tested and documented, not assumed. Where an adviser's file contains no analysis of those conditions, the professional claim becomes considerably easier to make out.

Where the claim is heard

An arbitration clause in an engagement letter binds you and your adviser. It has no effect on the Authority, which is not a party to it and whose decisions are challenged through the statutory route described above.

For the professional claim, the forum depends on where the adviser is established and what the terms say. A firm licensed in the DIFC or ADGM will usually have contracted for those jurisdictions' courts, which apply their own common-law systems. An onshore firm will normally be before the local courts, where technical accounting issues are commonly referred to a court-appointed expert. Where the parties chose arbitration, the seat determines the supervisory law — the DIFC and ADGM each have their own arbitration legislation, and arbitrations seated elsewhere in the UAE are governed by Federal Law No. 6 of 2018 on Arbitration. Our arbitration team handles these proceedings, and our commercial disputes practice runs the professional negligence claims that go to court.

What makes the difference in practice

Files win these cases. The material that decides them is generated during the engagement, not after it:

Keep the engagement letter and every variation of scope, including work agreed informally and later invoiced.
Record what was given to the adviser and when, with the covering correspondence.
Get advice in writing, including advice that a position carries risk. A verbal caveat that nobody minuted did not happen.
Keep the underlying records that support the return, in a form that can be produced to the Authority on request.
Where a treatment depends on conditions being satisfied, review annually whether they still are, and record the review.
Notify your adviser's professional indemnity position early where a claim is contemplated; a late notification can leave the insurer off risk and the claim uncollectable.

Handled in the right order — assessment first, professional claim second, both documented from the start — a tax consultancy dispute is a manageable commercial problem. Handled together and in a hurry, it becomes two losses instead of one. Our tax advisory team works on the underlying position while litigation counsel deals with the adviser, and can review an existing UAE tax strategy before a dispute reaches that point.

Disclaimer: this article is for general information only and does not constitute legal advice. Readers should obtain advice on their own circumstances before acting on anything set out above.