Accountant Disengagement Letter (Malta Template)

A cut-off date per service, because Malta's shortest cycle is six weeks, not one month

The practice may have prepared last year's financial statements, filed the income tax return for the year before that, submitted the last VAT return, and be mid-way through a payroll cycle. "The engagement ends immediately" leaves every one of those threads open — and the short cycles are the dangerous ones.

Article 10 VAT registrations file within six weeks of each quarter's end — a shorter window than the monthly cycles found in most other markets, once the quarter itself is accounted for. A single termination date for "tax matters" doesn't tell either party which quarter's VAT return still needs filing and by whom.

The template asks, for each service ticked, for two pieces of information: the last period actually handled and the date of filing or delivery. Each service writes its own cut-off date with an explicit note that later periods are not covered, and a separate section lists the deadlines that fall after the cut-off.

CFR registration doesn't lapse on its own — and doesn't transfer to the new accountant either

Authority to file online through CFR Services is registered separately from the engagement itself — as a tax practitioner (CFR01), or as a registered tax representative (CFR02) or registered user (CFR03) for VAT filing. None of it is created by an engagement letter, and none of it disappears automatically when one ends.

The practical consequence: if the outgoing practice's CFR registration is simply left in place, it can, in principle, remain able to interact with the client's tax account after the relationship has ended. And in the other direction, the incoming practice cannot file anything until its own registration is set up — so a change of accountant genuinely risks a period where returns can't be filed by anyone in either direction.

The right order is to get the incoming practice's CFR registration in place first, and only then treat the outgoing practice's registration as closed, rather than assuming one step happens automatically because the other did.

Two retention clocks, and the question of who holds the records

The retention obligation sits with the company, not the practice, and a change of accountant does not alter it. Company-law accounting records must be kept a minimum of ten years at the registered office under the Companies Act. VAT records, including invoices, are generally kept a minimum of six years from the end of the relevant year, with certain transactions conducted in Malta extending to ten years.

When the records are electronic, the decisive question is access. If the accounting system subscription is held in the outgoing practice's name, its lapse can cut off access to records the company is legally obliged to retain and, if required, produce — for either regime, whichever period applies to the document in question.

The letter has a dedicated section for this: which files are handed over and in what format, whose name the subscription is in, and what happens to access to historical data.

Handover of records, suspension of work, and confidentiality

Records the client supplied are the client's property and are returned. The practice's own working papers, calculations and internal notes remain the practice's property. Deliverables the client has paid for belong to the client. A single sentence in which the practice claims the whole "file" gets all three of these points wrong.

On non-payment, the right tool is to suspend work after notice, not to withhold records. The client's own records are not security for a fee, and withholding them just as a VAT or income tax deadline approaches moves the argument onto ground where the practice cannot win.

Confidentiality continues after termination. Handing information to the incoming accountant therefore requires the client's consent, and the acknowledgement at the end of this letter obtains it. The incoming practice's own client due diligence under anti-money laundering rules is its own separate obligation and does not transfer with the engagement.

Clauses explained

Direction of the letter

Termination by the client, or ending by the practice. All differing clauses — reason, requests, consents, signatures — switch automatically.

Reason and termination date

States which engagement is ending, the agreed notice period, and the termination date that follows from it.

Method of termination

Termination on the date, or termination once expressly listed outstanding work is completed. The second option opens a list field — the only way to commit to completion without contradicting the termination date.

Services and cut-off date for each

One toggle per service — financial statements, income tax, VAT, payroll, bookkeeping, company secretarial filings — each with the last period handled, the filing date, and the note that later periods are not covered.

Upcoming deadlines

What falls due after the cut-off date and with whom it now sits, with a note that the incoming practice should carry out its own review of deadlines.

Records, systems and retention

Which files are handed over and in what format, whose name the subscription is in, and the two separate retention regimes — company-law and VAT.

CFR registration

Which CFR registrations need to be dealt with, and the recommended order: the incoming practice's registration first, before the outgoing one is treated as closed.

Handover of records

Return of the client's records, the practice's working papers as its own property, a collection period, and notice before disposal.

Outstanding fees (optional)

Amount and payment term, with suspension of work as the tool rather than withholding the client's records, in its own section.

Handover and waiver of confidentiality

Written consent to speak with the incoming practice, with a note that its own client due diligence is its own obligation.

Confidentiality, liability and governing law

Confidentiality continues, agreed liability limits still apply to work already performed, Maltese law.

Recipient's acknowledgement

Signature block that turns the consent and the cut-off dates into an agreement rather than a one-sided statement.

What not to overlook

Check the engagement letter and current guidance before sending.

• Set a cut-off date per service, especially for VAT

  Article 10 VAT registrations file within six weeks of each quarter's end — a shorter window than the monthly cycles common elsewhere once the quarter is accounted for. A letter that states one termination date for all tax matters obscures which quarter's VAT return still needs filing.

  Malta Tax and Customs Administration — VAT return cycle

• Deal with CFR registration in the right order

  Authority to file online is registered separately as a tax practitioner (CFR01), registered tax representative (CFR02), or registered user (CFR03), and none of it lapses automatically when an engagement ends. Get the incoming practice's registration in place before treating the outgoing practice's registration as closed.

  CFR Online Services — registration and appointment forms

• Separate company-law retention from VAT retention in the handover

  Company-law accounting records are kept a minimum of ten years at the registered office under the Companies Act, while VAT records including invoices are generally kept a minimum of six years, with some transactions extending to ten years. The letter should state which regime applies to which document set and who now holds them.

  Be.Legal Malta — record-keeping obligations

• Clarify whose name the accounting system subscription is in

  If the electronic records system is subscribed in the outgoing practice's name, its lapse can cut off access to records the company is legally obliged to retain and produce. The letter should state which files are handed over, in what format, and what happens to historical access.

• Don't withhold records instead of suspending work

  On non-payment, the correct tool is to suspend work after notice. Records the client supplied are the client's property, and withholding them just before a VAT or income tax deadline moves a fee dispute onto ground where the practice cannot win. The practice's own working papers remain its property regardless.

• Obtain consent to the handover in writing

  Confidentiality continues after termination, so handing information to the incoming practice requires the client's consent; the acknowledgement at the end of this letter serves exactly that purpose. The incoming practice's own client due diligence under anti-money laundering rules is its own obligation and does not transfer.

How to write the letter

1. Choose the direction. Termination by the client, or ending by the practice. This decides the reason, requests and consents.
2. Read the engagement letter first. Note the date and the agreed notice period, so the termination date is correct rather than just the date of this letter.
3. Fill in the parties and the method of termination. Sender, recipient, date, reference, and termination on the date or after completion of listed outstanding work.
4. Set a cut-off date per service. The last period handled and the filing date for each service, especially VAT given its short cycle. Then list the deadlines that fall due later.
5. Sort out records, systems and CFR registration. Which files are handed over, whose name the subscription is in, and the order for setting up and closing CFR registrations.
6. Send and keep the signed acknowledgement. Download as Word or PDF, send with a request for signature, and keep the acknowledgement — it's the consent that makes the handover possible.

Frequently asked questions

Related templates

• Accountant's Terms of Business (Malta Template)