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For bookkeepers and bookkeeping teams

A UK bookkeeping engagement letter that stops the scope drifting

Bookkeeping is the engagement most likely to grow quietly. The letter is where you decide, in advance, what "and could you just…" costs.

A bookkeeping engagement letter is the agreement between a bookkeeper and a client that fixes the monthly cycle, the volume the fee covers, what happens above it, and who files what. It is the document that keeps prior-period clean-up, VAT filings and payroll questions from becoming unpaid work. The template below is a complete letter, free in Word and PDF.

Last reviewed against 5 primary sources.

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Bookkeeping engagement letter

The full letter in Word and PDF, written for the United Kingdom, including the volume and clean-up clauses.

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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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A monthly bookkeeping engagement starts as bank reconciliation and payables. Eighteen months later it includes chasing receipts, a VAT filing, payroll questions and a tidy-up of the two years before you arrived — usually at the original fee.

None of that is the client behaving badly. It is what happens when the only written description of the work is a quote from a year ago. The letter below is written to be specific about the cycle, the volumes, and what falls outside them.

Some firms call this document a bookkeeping contract or a bookkeeping agreement, and some a bookkeeping letter of engagement. The name does not matter; the contents do. The sample below is written as a letter because a client reads a letter, and it binds both sides once they have agreed to it.

What a bookkeeping letter has to pin down

Four things separate a bookkeeping letter that holds from one that gets renegotiated every spring.

  1. 1

    The cycle, not just the service

    Monthly, quarterly, or weekly — and by when. "Monthly bookkeeping" without a closing date is an invitation to send you a shoebox in January for the whole year. Put the day the client's records are due in the letter, and a client portal for accounting firms can ask for them on that day every month.

  2. 2

    Volume, and what happens above it

    Transactions, bank accounts, employees on payroll. Firms that price bookkeeping without a volume assumption are pricing a guess. Say what the fee assumes and what a material change triggers.

  3. 3

    Prior-period clean-up, explicitly excluded

    The single most common unpaid work in bookkeeping. Opening balances that do not agree, an unreconciled year, a chart of accounts someone invented. Exclude it, then quote it separately when you find it.

  4. 4

    Who files what

    Be explicit about VAT, payroll filings and the Corporation Tax return: which of them you prepare, which you review, which you file, and which remain entirely the client's.

The bookkeeping 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 maintain the books and records of [Client name] on a [monthly / quarterly] basis, beginning [date]. Each period we will record and categorise transactions, reconcile [number] bank and credit card accounts, maintain accounts payable and receivable, and produce [management accounts / a trial balance] within [number] working days of receiving complete records.

What the fee assumes

The fee below assumes approximately [number] transactions a period, [number] bank accounts, and [number] employees on payroll. If the actual volume differs materially and consistently, we will agree a revised fee with you rather than absorb it or invoice you by surprise.

What is not included

This engagement does not include correcting the records of any period before [date], preparing or filing the Corporation Tax return or any personal return, VAT registration or filing, payroll processing, or advice on accounting systems — unless separately agreed in writing.

If we find that opening balances or prior periods need work before we can proceed, we will stop, tell you what we have found, and quote for it separately.

Your responsibilities

You will provide bank statements, invoices, receipts and payroll information by [day] of each [month / quarter]. You remain responsible for the accuracy and completeness of the underlying records, for authorising payments, and for the final accounts and filings.

Where records arrive late, our timetable moves accordingly and any additional work is charged at [rate].

The limits of this work

This is a bookkeeping engagement. It is not an audit, a review, or a compilation of financial statements, and it will not necessarily detect fraud or error. We perform it in accordance with the ICAEW's engagement letter helpsheets.

Fees

[Amount] in pounds sterling per [period], invoiced [when], payable within [number] days. Work outside the scope is charged at [rate] per hour and agreed with you first.

Ending the engagement

Either of us may end this engagement on [number] days' written notice. On termination we will provide your records and data in a usable format; our working papers remain ours. Fees for work completed remain payable.

Confidentiality and your data

We keep your information confidential, hold it in accordance with the UK GDPR, and retain it for [number] years after the engagement ends.

Agreement

Please sign and return a copy.

[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.

What a UK bookkeeping letter should record

On HMRC's definition, professional bookkeeping is an accountancy service under the Money Laundering Regulations 2017. A bookkeeper not supervised by a professional body must register with HMRC for supervision, so the letter should name the supervisor.

The records stay the client's responsibility whoever keeps them. A private company must preserve accounting records for three years from when they are made, while HMRC expects VAT records to be kept for at least six. The handover clause should say which records you return, and in what form.

Who submits the VAT return

A VAT return and its payment are usually due one calendar month and seven days after the period ends. Say whether you submit as agent or the client submits, and the date your figures reach the client before that deadline.

Adding payroll is a new service

HMRC's anti-money laundering guidance counts a payroll agent that provides accountancy services as an accountancy service provider in its own right. Taking on payroll changes both the scope and the risk, and it belongs in a separate schedule.

Paying suppliers for the client

If you prepare or release supplier payments from the client's bank, the letter should say who authorises each run and in what form. Preparing payments is bookkeeping; deciding to pay them is the client's decision.

Clients now quarterly

Sole traders and landlords over the Making Tax Digital threshold send quarterly Income Tax updates. If you prepare them, the Making Tax Digital engagement letter covers the agent role and the timetable.

Where bookkeeping engagements go wrong

The clean-up nobody quoted

Two unreconciled years surface in week three. Without an exclusion the argument is about whether it was implied; with one it is a quote.

Volume creep

The client's business doubles, the transaction count doubles, the fee does not. A stated assumption makes that a conversation rather than a grievance.

The filing nobody owned

A VAT deadline passes because each side believed the other was handling it. Name the filings and name the owner.

Other engagement letters

What it is Engagement letters Accounting Accounting Tax preparation Tax preparation

Questions bookkeepers ask

Is a bookkeeping engagement letter the same as a bookkeeping contract?

In substance, yes. A bookkeeping contract, a bookkeeping agreement and an engagement letter all record the same terms: the work, the fee, what the client supplies and how either side ends it. The letter form is the convention in accounting practices because clients read it, but it is a contract all the same once the client has agreed to it. Have your own adviser review the version you send.

Do I need a separate letter for each entity?

Usually yes. Two companies with the same owner are two clients with separate records and separate liabilities. One letter covering both is difficult to enforce and awkward if the relationship with one ends.

How often should a bookkeeping letter be reissued?

Annually for recurring work, and immediately whenever the scope changes materially — a new entity, a payroll, a system migration. The letter should describe the work you are doing now, not the work you were quoted for.

Can I include a price increase clause?

Many firms do: a stated annual review, or an index. What matters is that it is specific enough to apply without a negotiation, and that the client saw it before they signed.

Does this cover compiling financial statements?

No, and that is deliberate. A compilation is a different engagement with its own standard (ICAEW TECH 07/16 AAF) and its own wording. Issue a separate letter, or a clearly separate section, for that work.

Sources

The primary sources this page is written against, last read against it on . Check them before relying on a detail; rules and thresholds change.

  1. GOV.UK Money Laundering Regulations registration for accountancy service providers
  2. legislation.gov.uk Companies Act 2006 s388(4)
  3. GOV.UK VAT Notice 700/21
  4. GOV.UK VAT return and payment usually due one calendar month and 7 days after period end
  5. GOV.UK MTD for Income Tax since 6 April 2026

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.