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For ending a client relationship

A UK disengagement letter that says exactly where your work stops

A client who leaves, or whom you ask to leave, still has a VAT quarter, a payroll run and a year end coming. The letter of disengagement is where you write down which of those you are no longer doing.

ICAEW's helpsheet on disengagement letters gives the purpose in one sentence: to clarify the matters your firm is still responsible for during the handover, and those that fall to the new accountant. It singles out ongoing, business-critical work such as payroll and VAT returns, where a gap of a few weeks becomes a penalty.

Last reviewed against 7 primary sources.

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Disengagement letter

The full letter in Word and PDF, written for the United Kingdom, with the completed-work, deadlines, records and fees sections.

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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 same letter serves when the practice is the one ending it: firing a client for unpaid fees, for a breakdown in cooperation, or because continuing would compromise you. The reason can stay out of the letter. The cut-off date, the unfinished work and the dates the client now owns cannot.

If a successor is already in view, expect their professional enquiry soon after. The template below asks for the client's authority to answer it, and the professional clearance letter page has both sides of that exchange.

What a UK disengagement letter has to cover

ICAEW lists five things the client should get a clear summary of. They are the spine of the letter below.

  1. 1

    What has been dealt with

    Work done within the engagement letter and anything added along the way. Name the periods, the returns submitted and the accounts approved, so there is no argument later about what was finished.

  2. 2

    What remains to be done

    The VAT return you had started, the payroll period in progress, the year-end accounts you had not begun. A status report attached to the letter, as ICAEW suggests, is clearer than a paragraph.

  3. 3

    The dates those things are due

    Give the filing and payment date for each open item. From the cut-off, meeting them is the client's job or the new accountant's, and the letter is the evidence that the client was told.

  4. 4

    Any further work you will still do

    If you will finish one return, run one more payroll or answer the successor's questions, say so, with its own fee. Everything else stops on the date in the letter.

  5. 5

    The fees due

    Both for work already done and for anything still to do. If you are thinking of exercising a lien over records, read the local section below first.

The disengagement 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],

Our engagement is ending

Further to [our conversation on [date] / your letter of [date] / our letter of [date]], this letter confirms that we will cease to act for [Client name] with effect from [cut-off date]. Our engagement letter dated [date] ends on that date, except as set out below.

What we have completed

We have completed the following work: [the accounts for the year ended [date], approved on [date] / the VAT return for the quarter to [date], submitted on [date] / payroll up to and including [pay period] / the Self Assessment return for [tax year], submitted on [date]]. The attached status report lists each item.

What we have not completed

We have not started, or have not finished, the following, and will not do so after [cut-off date]: [list]. Unless we agree otherwise in writing, responsibility for each of these passes to you, or to your new accountant, on that date.

Dates you now need to meet

The following are due after [cut-off date]: [VAT return for the quarter to [date], due [date]] / [RTI submissions from the [date] pay period] / [Confirmation statement, due [date]] / [accounts for the year ended [date], due at Companies House by [date]] / [Self Assessment return and payment, due [date]]. Penalties and interest for anything filed or paid late after that date are not our responsibility.

Work we will still do

[None.] / [We will complete [specific item] by [date], for a fee of [amount] plus VAT. We will do nothing else unless you ask us in writing and we agree.]

Your new accountant

When your new accountant writes to us, we will need your authority to reply and to share information about your affairs. Please confirm, by signing the enclosed authority or by email, that we may do so. Without it we can tell them only that you have not given it.

Your records

We will return the books and records that belong to you [by [date] / on request]. [Please collect them / We will send them in [format]]. We will keep copies and our own working papers, and will retain the records our anti-money laundering obligations require for the period the law requires.

HMRC and Companies House

We will remove our authorisation to act as your agent with HM Revenue & Customs for [Self Assessment / Corporation Tax / VAT / PAYE / CIS] on [date]. After that, HMRC will deal with you, or with the agent you authorise. [We will also stop providing our address as your registered office on [date]; please file the change at Companies House before then.]

Fees

Our final invoice for work up to [cut-off date], [number], is enclosed, for [amount] including VAT. [Our invoice [number] of [date], for [amount], also remains outstanding.] Both are payable within [number] days.

Please keep this letter

This letter and the attached status report record where our work ended. Please keep them with your records and pass a copy to your new accountant.

Yours sincerely,
[Name], [Firm name]

Enclosures: status report; authority to respond to your new accountant; final invoice

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 practice has to handle on the way out

In the UK, leaving a client usually triggers a second piece of correspondence: the successor's professional enquiry, often called professional clearance. Section 320 of the ICAEW Code of Ethics governs both sides, and ICAEW is blunt that the outgoing firm cannot give or withhold "clearance". The decision to act is the successor's.

Two regimes run underneath it: the Proceeds of Crime Act 2002, which makes tipping off an offence, and the Money Laundering Regulations 2017, which make each firm responsible for its own customer due diligence.

Answer the enquiry, with consent

Get the client's permission, preferably in writing, respond promptly, and if there is nothing to report, say so. If there is, give the details. Unpaid fees are no reason to stay silent, although you may mention them in the reply.

Records, lien and transfer information

ICAEW's Code requires you to deal promptly with a reasonable request to transfer records. A particular lien over records for unpaid fees may be available, but it exists to speed up a slow payer, not to extract payment in a genuine dispute. You should not normally charge for handover information.

Leaving over a suspicion

Do not say, in the letter or the reply, whether you have made a suspicious activity report. Disclosing it where that is likely to prejudice an investigation is an offence under section 333A of the Proceeds of Crime Act. You must still set out the facts the successor needs, honestly and unambiguously.

HMRC authorisation, service by service

Remove yourself as agent in your agent services account separately for each service, such as Self Assessment, VAT and Corporation Tax. For PAYE and Self Assessment, HMRC's agent dedicated line will also take a call saying you no longer act.

Where UK disengagements go wrong

The VAT quarter in between

The cut-off falls mid-quarter, the client believes the return is still yours, and the successor believes it is theirs. Name the quarter and the owner in the letter.

A reply that tips off

An outgoing firm writes "we have reported our concerns" in its reply to the successor. Say what happened, not what you did about it.

Records held to force a payment

A lien used as a bargaining chip in a genuine fee dispute turns an unpaid invoice into a professional conduct complaint. Settle or resolve the dispute separately.

Other letters a firm sends

Professional clearance letter Professional clearance What it is Engagement letters Accounting Accounting Bookkeeping Bookkeeping

Questions about letters of disengagement

Is a letter of disengagement the same as a disengagement letter?

Yes. Both mean the letter that ends the engagement and records where your responsibility stops. Some practices call it a termination letter; the content is the same.

Does the client have to sign it?

No. ICAEW's view is that a letter sent and not returned still helps your position in a later disagreement. What you do need back is the client's authority to answer the successor's professional enquiry, which can come by email if not on the enclosed form.

Do I have to say why we are ending the engagement?

No, and where the reason involves a suspicion of money laundering you should be careful not to hint at it. State the cut-off date and the facts. If you are unsure what can be said, ICAEW members can speak to its ethics and anti-money laundering helplines.

Can the new accountant rely on our identity checks?

The Money Laundering Regulations allow reliance on another regulated firm's customer due diligence in some circumstances, but the firm relying on it stays liable for any failure. A reply to a professional enquiry is not due diligence, whatever it says.

We are the auditor. Is this letter enough?

No. A statutory auditor ceasing to hold office has its own notification requirements under the Companies Act 2006, and the successor auditor is entitled to access to relevant information. This template is for accounts, tax and advisory work.

How should we hand back the records?

In a form the client and the new accountant can use, with a note of what went and when. A client portal vault makes that record for you. Have your own adviser review the letter before you rely on it for a difficult exit.

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. ICAEW ICAEW helpsheet "Disengagement letters"
  2. ICAEW ICAEW helpsheet "Change of professional appointment - outgoing accountant"
  3. legislation.gov.uk Proceeds of Crime Act 2002 s333A
  4. legislation.gov.uk MLR 2017 reg 39
  5. legislation.gov.uk MLR 2017 reg 40
  6. GOV.UK GOV.UK "Change or remove your authorisations as a tax agent" (updated 18 July 2025)
  7. ACCA ACCA factsheet "Obtaining professional work" (issued 15 December 2024)

What changed

  • Added an editable Word (.docx) copy of the letter beside the PDF.

Records leave. Your record stays.

When a client goes, the vault still holds every document they sent and every one you returned, and the audit trail shows who downloaded what and when. Retention is yours to set, on every plan.

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