Accountant engagement letter template
An accountant engagement letter sets out the services an accountancy firm will provide to a client, the fees, each side's responsibilities and how the engagement can end. It is sent when a new client signs up and renewed as the work changes, for either a sole trader or a limited company. The services, fees and client details change every time, so it is built from schedules for accounts, tax returns, VAT, bookkeeping, payroll and Making Tax Digital.
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What changes each time
28 values. Everything else is your wording, kept exactly.
The firm
- Firm's name
- Firm's address
- Firm's email and phone
- Professional body and membership number
- Anti-money laundering supervisor
- Professional indemnity insurer
The client
- Client's full name or company name
- Business name, if any
- Company number
- Client's address
- Previous accountant
- Signatory
Services
- Services included
- Year-end date
- Software
- Scope of bookkeeping
- Number of employees paid
- Date the client comes into scope for Making Tax Digital
Fees
- Fee for each service
- How it is billed
- Days to pay an invoice
- Days' notice before suspending work
- Assumed transactions a month
Terms
- Liability cap
- Start date
- Notice to end
- Where to find the privacy notice
- Complaints contact
The rules it usually needs
Written in plain English when the template is set up.
- One of several wordings
“Sole trader, or limited company: who the letter is addressed to, what it covers and who is responsible for the returns and accounts.”
The document carries the wording for whichever applies, and the other wording is left out.
- One of several wordings
“Each schedule offers the sole trader version or the limited company version of the service.”
The document carries the wording for whichever applies, and the other wording is left out.
- Once for each item
“One row for each service in the table and for each fee, and a row for any other service.”
The table has one row for each, so it grows or shrinks to match.
- One of several wordings
“Fees are shown with VAT added, or without it because the firm is not VAT registered.”
The document carries the wording for whichever applies, and the other wording is left out.
- One of several wordings
“Fees are billed per year, per month or per hour.”
The document carries the wording for whichever applies, and the other wording is left out.
- Only when…
“Include the paragraph about contacting the previous accountant only when the client had a previous accountant.”
When this applies, the paragraph about contacting the previous accountant is included; when it does not, it is left out and the rest of the document is unchanged.
- One of several wordings
“The firm is a member of a professional body, or is not.”
The document carries the wording for whichever applies, and the other wording is left out.
- One of several wordings
“The firm is supervised for anti-money laundering by its professional body, or by HMRC.”
The document carries the wording for whichever applies, and the other wording is left out.
- One of several wordings
“The liability cap applies in total, or to each year.”
The document carries the wording for whichever applies, and the other wording is left out.
- Only when…
“Include the consumer paragraph only when the client is an individual engaging the firm wholly or mainly for personal, not business, purposes.”
When this applies, the consumer paragraph is included; when it does not, it is left out and the rest of the document is unchanged.
- Only when…
“Include the complaints reference to the professional body only when the firm is a member of a professional body.”
When this applies, the complaints reference to the professional body is included; when it does not, it is left out and the rest of the document is unchanged.
- One of several wordings
“The engagement covers a particular accounting period and later ones, or until the work is completed.”
The document carries the wording for whichever applies, and the other wording is left out.
- Only when…
“Include the right to cancel section only when the client is a consumer and the letter is agreed by post, by email or away from the firm's office.”
When this applies, the right to cancel section is included; when it does not, it is left out and the rest of the document is unchanged.
- Only when…
“Include the request to start work during the cancellation period only when the client wants work to start straight away.”
When this applies, the request to start work during the cancellation period is included; when it does not, it is left out and the rest of the document is unchanged.
- Only when…
“Include the model cancellation form only when the client is a consumer and the right to cancel is included.”
When this applies, the model cancellation form is included; when it does not, it is left out and the rest of the document is unchanged.
- Only when…
“Include each service schedule only when that service is included.”
When this applies, each service schedule is included; when it does not, it is left out and the rest of the document is unchanged.
- Only when…
“Include the Making Tax Digital for Income Tax schedule only when the client's qualifying income brings them within scope.”
When this applies, the Making Tax Digital for Income Tax schedule is included; when it does not, it is left out and the rest of the document is unchanged.
- Only when…
“Include the signature wording for a company only when the client is a limited company.”
When this applies, the signature wording for a company is included; when it does not, it is left out and the rest of the document is unchanged.
Questions people ask
What is an accountant engagement letter?
It is a letter, signed by both sides, that sets out what an accountant will do for a client, what the client must do, the fees and how the arrangement can end. Professional bodies expect accountants to agree one with every client.
What should an engagement letter include?
The services and what is not included, the fees and when they are due, the client's responsibilities for records and information, anti-money laundering checks, how the accountant deals with HMRC for the client, a limit on liability, complaints and how to end the arrangement.
Does an accountant have to check a client's identity?
Yes. Accountancy firms are regulated under the money laundering rules and must carry out due diligence on a client before they start work, including identifying directors and anyone who owns or controls more than 25% of a company.
Does a limited company need a different engagement letter from a sole trader?
The wording differs. A sole trader is personally responsible for their tax return, while a limited company's directors are responsible for the accounts and the company's returns, so the letter covers different responsibilities, and different services.
What is Making Tax Digital for Income Tax?
It requires self-employed people and landlords above an income threshold to keep digital records and send HMRC quarterly updates using compatible software. The letter has an optional schedule for a client who is in scope, with the date they come into it.
Use this template
It opens in DocuWeave as a template you can check, change and publish. Nothing is used until you do.