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For accounting practices

A UK accounting engagement letter written for the year-end

The year-end engagement is the one clients think they understand. The letter is where you find out that they thought it included three other things.

Most accounting practices send an engagement letter that describes "accounting services" and a fee. It works until the year the client asks why the Corporation Tax return was extra, or why their personal return was not in the price, or why the management accounts stopped in August.

Last reviewed against 7 primary sources.

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Accounting engagement letter

The full letter in Word and PDF, written for the United Kingdom, covering year-end accounts and the filings around them.

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Type in your firm, the client, the scope and the fee, and it writes a complete engagement letter for the United Kingdom, ready to print or save as a PDF. Nothing you type is stored.

Next step: send it to the client through FirmHello, where it stays on their record beside everything else they send you.

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The letter below separates the year-end work from everything adjacent to it, which is where the money and the goodwill both live. It also states what the engagement is not, because "accounts" means one thing to a practice and something broader to the person paying for them.

What the letter has to separate

An accounting engagement is really three or four engagements that arrive together. Naming them individually is most of the work.

  1. 1

    The accounts, and what standard they are prepared under

    Say what you are producing — year end accounts — for which entity and which period, and on what basis. A compilation under ICAEW TECH 07/16 AAF is a different engagement from a set of management accounts, and the client cannot be expected to know that.

  2. 2

    The filings, one by one

    Corporation Tax return, VAT, payroll year end, personal returns for the directors. List each one as included or excluded. Silence always reads as included. Each included filing needs records from the client, and a client portal for accounting firms turns those into one request list with a date on every item.

  3. 3

    What you are not doing

    Not an audit, not a review, no verification of the underlying records, no responsibility for detecting fraud. This sentence is short and it is the most important one in the letter.

  4. 4

    Who signs off and when

    The client approves the accounts before filing. Say so, say what approval looks like, and say what happens to your deadline if it does not arrive.

The accounting engagement letter

Written for United Kingdom. The downloads are the same text, as a Word document to edit and a PDF to put on your letterhead.

[Firm letterhead]

[Date]

[Client name]
[Client address]

Dear [Client contact],

The engagement

We will prepare the year end accounts of [Client name] for the year ending [date] from the records and information you provide, and prepare the Corporation Tax return for the same period.

The basis of our work

We will perform this engagement in accordance with the ICAEW's engagement letter helpsheets, and where it constitutes a compilation, ICAEW TECH 07/16 AAF.

This is not an audit or a review. We will not verify the accuracy or completeness of the records you provide, we will express no opinion or assurance on the accounts, and the engagement cannot be relied upon to identify fraud, error or illegal acts.

What is not included

Unless separately agreed in writing, this engagement excludes: bookkeeping or correction of the underlying records; VAT returns; payroll and payroll year end; personal tax returns for directors, shareholders or their families; management accounts during the year; advisory, valuation or transaction work; and representation in any enquiry or examination by HMRC.

Your responsibilities

You are responsible for maintaining adequate accounting records, for the completeness and accuracy of the information you provide, and for the accounts themselves. You will provide the records we request by [date].

You will review and formally approve the year end accounts and the Corporation Tax return before we file anything on your behalf. We cannot meet a filing deadline without that approval.

Fees

Our fee for the work described is [amount] in pounds sterling, invoiced [when] and payable within [number] days. It assumes the records are complete and reconciled when they reach us. Work arising from incomplete records, and any work outside the scope, is charged at [rate] per hour after we have agreed it with you.

Ending the engagement

Either of us may end this engagement on [number] days' written notice. Fees for work performed to that date remain payable. We will provide your records on request and, where you appoint another firm, respond to a professional clearance request promptly.

Confidentiality, data and retention

We keep your information confidential except where the law or our professional body requires disclosure. We hold it in accordance with the UK GDPR and retain our files for [number] years after the engagement ends, after which they are securely destroyed.

Agreement

Please sign and return a copy of this letter.

[Name], [Firm name]

Agreed for [Client name]:

Signature ______________________ Date ____________

Before you use this

Supplied as-is, with no guarantee. These templates are general information, not legal advice, and not a substitute for it. Have your own legal adviser review and adapt one to your practice and your jurisdiction before you put it in front of a client. FirmHello accepts no responsibility or liability for any use made of them.

UK year-end accounts and the Companies House timetable

The Companies Act 2006 puts a company's accounts on its directors, who must not approve them unless satisfied they give a true and fair view, audited or not. The letter names the directors, not the finance contact, as the approvers.

A private company must deliver its accounts to Companies House within nine months of its year end; longer first periods have their own rule. Late filing penalties run from £150 to £1,500 and double if the accounts are late two years running.

Who files, and by when

Say whether you deliver the accounts to Companies House for the company or send them to the directors to file, and the date you need their approval to make the ninth month. The penalty falls on the company either way.

Directors' identity checks

Since 18 November 2025 directors and people with significant control must verify their identity with Companies House, existing directors alongside their next confirmation statement. Verifying clients as an Authorised Corporate Service Provider is a separate service.

The size regime used

For financial years beginning on or after 6 April 2025, a small company meets two of £15 million turnover, £7.5 million balance sheet and 50 employees; a micro-entity two of £1 million, £500,000 and 10. Name the regime the accounts use.

Records the company keeps

The letter should say that maintaining adequate accounting records is the company's duty and that you prepare the accounts from them. When records are missing, the fee clause, not goodwill, decides who pays for rebuilding them.

The three arguments this letter prevents

“I thought my personal return was included”

It almost never is, and it is almost never said. One line in the exclusions ends a conversation that otherwise happens every spring.

“Why is the fee higher than last year?”

Because the records arrived in a worse state. Unless the letter said the fee assumed reconciled records, that is your problem rather than theirs.

“You filed it, so you checked it”

The sentence saying you did not verify the records, and that the client approves before filing, is the one that matters when HMRC asks.

Other engagement letters

What it is Engagement letters Bookkeeping Bookkeeping Audit Audit

Questions accounting practices ask

Does one letter cover the accounts and the tax return?

It can, provided both are described separately and priced clearly. Many firms prefer two letters because the work is often done by different people and the tax engagement carries its own professional obligations.

What if the client's records are worse than expected?

That is what the fee assumption clause is for. Stop, tell them what you have found, and quote the remedial work separately. A letter that assumed reconciled records makes that a straightforward conversation.

Do I need a new letter if only the fee changes?

Reissue annually as a matter of course. If the only change mid-year is the fee, a short written variation the client agrees to is usually enough — but it must be in writing and it must be accepted.

Is an engagement letter required by my professional body?

Practice varies by jurisdiction and by engagement type; for some engagements it is effectively mandatory, and the ICAEW's engagement letter helpsheets is where to check. Even where it is not required, it is the document that decides every fee dispute.

What changed

  • Added an editable Word (.docx) copy of the letter beside the PDF.
  • Added the section on what UK law adds, written from primary sources, and reviewed the shared letter text for wording that only US law supports.
  • Corrected the standard for unaudited accounts: UK practices report under ICAEW TECH 07/16 AAF. The FRC has never adopted ISRS 4410 in the UK.

The letter is the easy half

Sending it, getting it back signed, and finding it again in two years is the half that eats the week. That is what the portal is for.

No card and no sales call. If you would rather tell us about your firm first, use the longer form.