It depends entirely on the context. One of the Royal Navy's most serious friendly fire incidents of WWII came on the 27th August 1944.

The 1st Minesweeping Flotilla, with four Halcyon class minesweepers (Jason, Britomart, Hussar and Salamander), had been operating off the French coast since the 5th June, clearing German minefields for ships travelling between Portsmouth and the Normandy beachhead. On the 22nd August, they were dispatched to clear waters off Le Havre, to allow a bombardment force to approach the city and support ground forces. On the 25th, the flotilla was rested at Arromanches, and was to return to clearing the channels for shipping to Portsmouth on the 27th. However, the senior officer of the flotilla, Commander Trevor Crick, of Jason, was aware that the flotilla had not completely searched the area off Le Havre. Following a brief discussion with with the staff officers aboard HMS Ambitious, the headquarters ship of Captain (Minesweeping) Captain Lord Teynham (commanding the minesweeping effort), Crick received permission for his flotilla to complete the Le Havre search.

On the 27th, the flotilla, accompanied by two trawlers to lay marker buoys, began to carry out operations off Cap D'Antifer. The weather was good, and crew members who weren't required for sweeping were sunbathing and resting on deck. Just before 12 noon, an RAF aircraft overflew the flotilla. Suddenly, at about 13:30, a flight of aircraft dived out of the sun, and attacked Britomart and Hussar with cannon and rockets. The aircraft were RAF Typhoons, and were identified as such by the men of the flotilla; Crick sent two radio messages in quick succession reporting attack by friendly aircraft. All ships of the flotilla flew Union Flags, and fired recognition signals. These did not stop the RAF aircraft. The next attack fell mainly on Salamander and the trawler Colsay, while Jason was strafed. A third strike saw Jason being strafed further. Hussar had been heavily damaged by the first strike, with a major fire aboard; she sank suddenly at 13:41, just eleven minutes after the start of the attack. The RAF aircraft left at 13:42, leaving the flotilla to make life-saving efforts. Britomart was disabled, her captain killed, and she was beginning to sink; her senior surviving officer ordered her abandoned. She would roll over and sink at 14:00. Salamander's stern had been blown off, and she was drifting into the range of German shore batteries. However, she would be successfully towed back to Arromanches, though she would be declared beyond repair once she reached there. Seventy-eight officers and ratings were killed, and another 149 wounded. How could such a thing happen?

An enquiry was soon formed by Admiral Bertram Ramsay to determine the course of events. The enquiry determined that neither the RAF pilots, nor the minesweeping flotilla were at fault. What had happened was that the staff aboard the headquarters ship Ambitious had failed to inform the staff of Rear Admiral J. W. Rivett-Carnac, Flag Officer British Assault Area (FOBAA), of the change of plans for 1st Flotilla - a staff officer had forgotten to add the annotation (R)FOBAA (Repeat to FOBAA) to the signal containing the orders for 1st Flotilla. On the morning of the 27th, the flotilla would be sighted by Allied coastal radar; since the radar crews were not expecting Allied ships, these ships were identified as hostile. An RAF reconnaissance of the area was requested; this was the overflight at noon, which reported sighting a force of minesweepers and trawlers, apparently friendly. The RAF checked this with the staff of FOBAA, who confirmed that they were not aware of any Allied shipping in the area. However, as the ships were still possibly friendly, FOBAA staff attempted to communicate with the staff aboard Ambitious to confirm that no ships were expected in the area. A telephone call was made, but was never received aboard Ambitious; no further attempt to make contact was made. As a result a flight of eight Typhoons, from 263 and 266 Squadron RAF, was dispatched to engage. The flight was commanded by Wing Commander John Baldwin. Baldwin was wary about his orders, and repeatedly requested confirmation that the ships were hostile; ultimately, he was given a direct order to proceed. While the attack was taking place, the signals made urgently by the flotilla were sighted, but had to be ignored, thanks to the risk that these were false signals being made by Germans. Three men were court-martialled at Rouen for their part in the disaster. Captain (Minesweeping) was acquitted; he had been away from Ambitious on the 27th, and could have done little to prevent it. A FOBAA staff officer, Lt Cdr Robert Franks, who had been responsible for contacting Ambitious, was also acquitted. The final man to be court-martialled, Commander Dennis Venables (Captain (Minesweeping)'s deputy), was the staff officer aboard Ambitious who was responsible for the changed orders for 1st Flotilla. He was found guilty of negligence for his failure to ensure that the orders were properly transmitted to FOBAA. He would receive a severe reprimand, but would continue within the Royal Navy, winning a medal for, ironically, minesweeping off Le Havre. The RAF pilots were cleared of all wrong-doing.

Another attack by Allied aircraft on British ships occurred on the 9th May 1943. Two Hunt-class destroyers, the Bicester and Zetland, operating off the coast of Tunisia, were attacked by a flight of USAAF Spitfires. The aircraft had misidentified the ships as Axis craft, and attacked with bombs and gunfire. Bicester took the worst of the damage; a bomb pierced her hull and landed in one of her fuel tanks, but did not explode. This, combined with three near-misses, caused significant damage and flooding, though she was never at risk of sinking. Bicester's captain persuaded the attacking pilots that his ship was "allied, but no longer friendly", and they broke off any further attacks. The ensuing enquiry found neither party at fault, but recommended that ships stay away from the coastline in daylight, and that ships should paint recognition panels on their bridges, to aid pilots identifying friendly ships.

During the hunt for the Bismarck, fourteen Swordfish aircraft from 820, 818, and 810 Squadron, aboard Ark Royal, were flown off to attack Bismarck with torpedoes. Bismarck was being shadowed by the cruiser Sheffield. Sheffield had been detached from Force H before the strike was launched; Ark Royal should have been informed of this, but procedures were slow. The message had to travel from Force H's flagship, Renown, to the shore station at Portishead, before being re-transmitted to Ark Royal (Ark Royal was outside line of sight of Renown, so visual or VHF signals could not be made). Ark Royal received the signal, but the radio office was busy, and it was not deciphered and passed on to the pilots before the strike was launched. The Swordfish pilots, briefed that the first ship they encountered would be Bismarck, located a blip on their radars about where they expected Bismarck to be, and dived to attack with torpedoes. Unfortunately, they had not found Bismarck, but Sheffield. Following Fleet Air Arm procedure, they attacked in groups of three, each group waiting for the flight before to make its attack. Captain Larcom, commanding Sheffield, took things in his stride. He ordered his AA crews not to fire, and brought his ship broadside on to each attack, hoping that the aircrews would recognise their mistake - Sheffield and Ark Royal had operated together on numerous occasions. When the Swordfish failed to break off, he would bring his ship round to 'comb' the tracks of the torpedoes. Three pilots recognised Sheffield, and broke off. The remainder attacked, but luckily for Sheffield, the torpedoes were using less-reliable magnetic exploders, five of which failed, causing the torpedoes to prematurely explode. Larcom was able to dodge the remaining torpedoes. As the Swordfish returned to Ark Royal, they received a warning about Sheffield's presence. Nobody was injured in this attack, and it warned the RN that its magnetic exploders were faulty in this case; the attack on Bismarck would use the more reliable contact detonators. No enquiry was held into the incident, and no-one was held responsible.

Sources:

Friend or Foe: Friendly Fire at Sea 1939-1945, Paul Kemp, Leo Cooper, 1995

C.B. 4273(52) Ships Sunk or Damaged by Enemy Action: 3rd Sept. 1939 to 2nd Sept 1945, Admiralty, Admiralty, 1952

Halcyon Class Ships: Friendly Fire Attack, Bill Burn, http://www.halcyon-class.co.uk/FriendlyFire/friendly_fire.htm, 2012