company name

Letter of Engagement


your name]

[your address]



Various Accountancy Bodies have recommended that practitioners offering services to clients should have agreements set out in writing. The following sets-out our firm's understanding of the services that you, as a client, require to be performed. If you are in agreement with these points, please sign and date the spare copy, and return it to us.  


You have agreed that you, or your staff, will be responsible for:  

1.1 Keeping proper records of receipts and payments, particularly all cash, and sales, and petty cash expenses. In this instance, our firm issues free ABC Accounts Books for the purpose. (Other records can be kept, if suitably approved by us). Under Self-Assessment original documents must be retained by yourself  

1.2 Keeping all records required for VAT regulations. Completing all VAT Returns required and by the dates specified. In this instance, our firm issues free ABC Accounts Books for the purpose  

1.3 Reconciling the bank balance(s) monthly (or more frequently) with the bank statements.  

1.4 Where credit terms with customers or suppliers are encountered, to keep "posted and balanced" (i.e. written up) the personal accounts in a sales and purchase ledger (or suitably approved substitutes) [We can supply specimens]  

1.5 Preparing, where relevant, a detailed list of these "ledger" balances. Providing this list at the end of each accounting period.  

1.6 Preparing details, where relevant, of the annual stocktaking, suitably priced and calculated. The value should be, in normal accounting terms for each item, at the lowest of: cost, replacement price, or current market value.  

1.7 Provide, promptly, after the end of the accounting period, the details as listed on our letter "Request for Books".   In return, we, as accountants, have agreed to:  

1.8 Prepare the draft Financial Accounts based upon the accounting records maintained by your business. Discussion of first accounts, and discussions thereafter where required. Obtaining eventual approval of a photocopy of a typed fair copy and submission to HM Revenue & Customs.  


We will act on your behalf in:  

2.1 The preparation of the business' tax computations (and where relevant, capital allowances claims). These will be submitted to HM Revenue & Customs on full payment of our fees. This will be done with a view of laying before HM Revenue & Customs items necessary to refute any allegations of with-holding information. Even though HM Revenue & Customs has expressed the wish that it does not wish to see Accounts - merely have the items transferred to the Self Employed section of the Self Assessment tax return, as we do this to protect you.  

2.2 Checking any Self Employed Forms/Calculations, etc received by us. In this instance, if Form 64-8, recommended to be signed by you for us to send to HM Revenue & Customs, has been signed, we should have received a copy. There is no guarantee that HM Revenue & Customs will have complied, especially in view of changes of addresses.  

Where we have received full co-operation from you, and we disagree with any of the Figures shown by HM Revenue & Customs, we will write formally to HM Revenue & Customs, setting out our views, and apply for any Postponement of excess sums demanded. A photocopy of our correspondence will be sent to you to confirm our action taken.  

In return, you as being "in business", will maintain and be responsible for all matters required by statute to be completed by "officials" of your business especially:  

2.3 National Insurance  

Pay As You Earn  

Forms P11D  

But we shall be pleased to advise you on any of these, or other business taxation matters, if requested.

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3. TAXATION - PERSONAL (YEAR END APRIL 5) - Self Assessment Tax Return  

Prior to April 5 annually, we shall provide you with our firm's:  

3.1 One Page Tax Return Schedule - summarising what relevant entries we used for the previous year’s Self Employed Tax Return.  

To assist you in complying with the ever-changing rules, we expect good and prompt co-operation from our clients, in providing the relevant document quite swiftly.  We do not accept responsibility where clients are late, and delay providing us with their FULL documentation, or do not have the courtesy to allow us adequate time to file by the 31 January deadline.       

3.2 In return, you will:   Provide the information requested on the covering letter, within the stipulated time. Please bear in mind that our annual workload often requires that we need to clear Tax Returns by the end of July annually. Therefore we are under severe time pressure from mid March to the end of July. From May onwards, our time is at a premium on servicing Self Employed persons whose Accounts need to be made up to April 30. There are a large number of these who are prompt, and so need priority.  


Because of the constraints of the Financial Services Act, etc, if it is necessary at any time for us to advise on this subject, a separate letter setting out our terms as required, will be forwarded.  

5. FEES  

5.1 Our fees are based upon the time necessarily occupied on work carried out. They are payable in full at the time of presentation. Interest and any third party fees will be added if payment is not made in accordance with these limits. The rates will take into account: the degree of responsibility, and the skill involved. A timesheet is maintained. Our firm will provide a photocopy, on request.  

5.2 Minimisation - Where it is necessary for us to perform work outside the responsibility set out in the earlier part of this letter, may we remind you that this will involve additional fees?  While we are happy to assist you in any way we can, we feel that you may wish to take particular care that your work has been correctly completed to a stage before we begin to provide services to you.  


These are provided in conjunction with other firms of accountants who provide these specialised services. A separate letter of engagement from them applies.  

Yours sincerely  


Contents Noted and Agreed by Client(s):  

Signed.................................... Date of signing.............  

[your name]  

[your address]