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For a change of accountant

A professional clearance letter, and the reply it deserves

Nobody can give you clearance to act. The letter still matters, because it is how you find out what the last firm knows before you sign a new client up.

Most practices call it a professional clearance letter. ICAEW calls the process professional enquiry, and says plainly that "clearance" is a misnomer: the existing accountant has no authority to give or withhold permission to act. The decision to accept the appointment is yours, made on what the enquiry turns up.

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Free download

Professional clearance letter

The request and the reply as one document, in Word and PDF, for UK practices, with the handover schedule and the three versions of the reply.

Download the PDF Download for Word

No email required.

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

Get started

The order is set out in ICAEW's helpsheet for incoming accountants. Explain to the prospective client that you have to contact the existing accountant, and get their authority, preferably in writing. Ask the client to tell the existing accountant about the change and to authorise them to cooperate. Then write, asking for anything that might affect your decision.

Most firms put the handover request in the same letter, which ICAEW accepts, provided you have satisfied yourself it is proper to act before you start the work. This professional clearance letter template has both sides: the request you send, and a reply for when you are the firm being asked.

What the request has to contain

Five things. The first is the one that most often holds a reply up.

  1. 1

    The client's written authority

    The existing accountant usually needs the client's consent to respond, because of the duty of confidentiality in section 114 of the Code. Enclose a signed authority, or the client's email, rather than asserting that you have one.

  2. 2

    The role, and the period

    Say what you are being asked to do and from when: accounts and Corporation Tax from the year ending [date], Self Assessment from [tax year], VAT from the quarter to [date]. A vague request gets a vague answer.

  3. 3

    The question, asked properly

    Ask for any circumstances or information you need to consider before deciding whether to accept. Do not ask whether they have reported suspicions of money laundering: ICAEW's Code says you should not ask, and they could not answer.

  4. 4

    The handover you need

    List it. ACCA defines the minimum it expects free of charge as the last set of accounts the client approved and a detailed trial balance that agrees to them. Add whatever else the first job needs, such as tax computations and losses carried forward.

  5. 5

    A reasonable date for the reply

    Give a date. If it passes, chase by phone or email first; the recorded-delivery letter that states you will accept in the absence of a reply comes after that, not in the first letter.

The request, and the reply

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

Part 1: The request, from the incoming accountant

[Firm letterhead]

[Date]

[Existing accountant's firm]
[Address]

Our ref: [reference]

Dear [Name / Sirs],

[Client name] ([company number / UTR])

Professional enquiry

We have been approached by [Client name] to act as [accountants / tax advisers / payroll agents] with effect from [the year ending [date] / the tax year [year] / [date]]. We enclose [a letter / an email] from [Client name] authorising you to discuss their affairs with us and to release the information below.

Please let us know of any circumstances or information we should consider when deciding whether to accept this appointment. If there are none, please confirm that to us.

Handover information

If there is nothing we need to be aware of, please also send us the following, or confirm that you have already provided it to the client:

1. The last set of accounts approved by the client, for the [year/period] ended [date], with a detailed trial balance that agrees to them.
2. The Corporation Tax computation and return for that period, with capital allowances pools and any losses carried forward.
3. [The client's Self Assessment return and computation for [tax year], and details of payments on account.]
4. [The latest VAT return, the VAT scheme used, and the date the next return is due.]
5. [Payroll: the last full payment submission, the PAYE reference and the date of the last pay run you processed.]
6. Details of any open HMRC enquiries, correspondence awaiting a reply, or elections and claims with a time limit that falls in the next [twelve] months.
7. [Any books and records belonging to the client that you hold.]

We would be grateful for your reply by [date, at least two weeks from now].

Yours sincerely,
[Name], [Firm name]

Enclosure: authority from [Client name]

Part 2: The reply, from the outgoing accountant

[Firm letterhead]

[Date]

[Incoming accountant's firm]
[Address]

Your ref: [reference]

Dear [Name],

[Client name] ([company number / UTR])

Thank you for your letter of [date]. [Client name] has authorised us to respond. Use the paragraph that applies.

Version A: nothing to report

We are not aware of any professional reason why you should not accept this appointment. [The handover information you requested is enclosed / will follow by [date].] [Fees of [amount], invoiced on [date], remain outstanding.]

Version B: matters you should know about

Before you decide whether to accept this appointment, you should be aware of the following: [state each matter factually and specifically, for example: "The client told us on [date] of rental income received since [date]. It has not yet been disclosed to HMRC, and full disclosure is needed for every period affected."] [The handover information will follow by [date].]

Version C: the client has not given consent

[Client name] has not given us authority to respond to your enquiry, so we are unable to give you a substantive reply.

Yours sincerely,
[Name], [Firm name]

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.

Where professional clearance goes wrong

The reply that tips off

An outgoing firm that answers "we have made a report" risks the tipping-off offence. The Code says not to answer that question either way; state the facts, as Version B does, and stop.

A clean reply taken as due diligence

"No professional reason" says nothing about who the client is. The Money Laundering Regulations 2017 require customer due diligence when you establish the relationship, and a firm that relies on another's checks stays liable for them.

Fees held against the reply

Outstanding fees are not a reason to ignore an enquiry, and a lien over records is not a lien over a reply. The outgoing firm may mention the fees in its letter; it still has to answer.

Other letters a firm sends

Disengagement letter Disengagement Self Assessment Self Assessment What it is Engagement letters Accounting Accounting

Questions about professional clearance

Is professional clearance a legal requirement?

It is a professional one. Section 320 of the ICAEW and ACCA Codes requires you to decide whether there is any reason not to accept an engagement when you replace another accountant, and the enquiry is how you find out. For a statutory audit the Companies Act 2006 adds its own procedure.

What if the previous accountant never replies?

Chase by phone and email. ICAEW's helpsheet suggests that after a reasonable time, possibly 14 to 30 days, you write by recorded delivery saying you will accept unless you hear within a stated period, and that less than two weeks is unlikely to be reasonable. ACCA's factsheet suggests a stated period of, say, seven days. If there is still no reply, you may assume there is nothing adverse, but you still have to take other reasonable steps.

What if the previous adviser was not qualified?

ICAEW expects you to write to the existing accountant whether or not they are qualified. If they cannot be found, check with their professional body, send a recorded letter to their last address, and ask the client whether any regulatory or legal matters are ongoing.

Can the outgoing firm charge for the handover?

Not normally. ICAEW says records and information should not usually be charged for without good reason, such as archive work going back years, or copies of returns the client already has. ACCA says reasonable transfer information is provided free of charge.

The client will not let us contact the last firm. Now what?

Ask why, and write down the answer. A client who will not cooperate at the start is a warning, and ICAEW notes it is difficult to see how a constructive relationship would follow. The decision is still yours.

Should we have this checked before we use it?

For a routine change, the template is enough. Where the reply will disclose a matter of concern, or anti-money laundering questions are involved, ICAEW and ACCA members can use their institute's ethics and technical helplines first. The firm on the other end may well be leaving under a disengagement letter of its own.

What changed

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

The handover is the slow half

The outgoing firm answers you; most of the rest comes from the client. FirmHello sends a new client one request list for their identity documents, last accounts and HMRC details, and chases it until it is complete.

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