Accountants' Standard Terms of Business Template (UK)

Terms of business and an engagement letter do two different jobs

A well-built client agreement in an accountancy practice has three layers, and they are easy to confuse. The engagement letter is per-client and per-period: it says which services you are providing, when they start, and what they cost. A tailoring schedule — many firms call it "key facts" — records the variable details for that specific client, such as which accounting framework the financial statements will be prepared under and the date you need their records by. The terms of business are neither of those: they are the standing terms that sit behind every engagement your firm accepts, unchanged from client to client, so that the letter can stay short.

That split only works if you say which document wins when they disagree. This template states plainly that where the engagement letter and these terms conflict, the engagement letter takes precedence — because the letter is the document that was tailored to this client, and it is the one they read most carefully. Firms that never write a precedence rule end up arguing about it at exactly the moment they can least afford to.

It also matters how the client accepts them. Terms of business are usually not signed as a standalone document; they are accepted because the client signs the engagement letter that incorporates them. This template says that expressly and names the acceptance route, so a client cannot later argue they were sent a schedule they never agreed to.

Since 18 May 2026 your terms describe a regime that didn't exist when most were written

Mandatory registration for tax advisers is now law. Part 7 and Schedules 20 to 22 of the Finance Act 2026 require a business that is paid to interact with HMRC about a client's tax affairs to be registered with HMRC and to hold an Agent Services Account. Registration opened in phases: from 18 May 2026 for advisers with no existing Agent Services Account, from 18 August 2026 for those holding Self Assessment or Corporation Tax agent accounts but no ASA, and from 18 November 2026 for firms that only run third-party payroll, with a further tranche for financial-services organisations. Firms that already hold an ASA are not asked to register again.

The consequences of getting this wrong are not administrative. Interacting with HMRC while unregistered can attract a financial penalty of £5,000, rising to £10,000 per contravention for repeat breaches, and sections 236 and 237 of the Finance Act 2026 provide for temporary and permanent ineligibility orders. HMRC may also publish the details of an adviser who is penalised or banned.

This is why the professional-obligations wording in this template names your registration status as something you state to the client rather than something you leave implicit on a web page. It is also why nearly every set of UK accountants' terms in circulation is now out of date on its most basic point — who you are and on what authority you deal with HMRC on the client's behalf.

A liability cap that points somewhere else is not a liability cap

The most common serious defect in accountancy terms of business is circular drafting on liability. The terms limit the firm's liability "as set out in the engagement letter" — and the engagement letter, written from a separate template, contains no figure at all. The result is a practice that believes its exposure is capped and has nothing that caps it. It reads as handled, which is worse than an obvious gap, because nobody goes looking for it.

This template makes you state the cap in the document you are editing, and gives you the three bases firms actually use: a fixed sum, a multiple of the fees for the engagement, or the fees actually paid. Whichever you choose, the clause prints a real number or a real formula rather than a cross-reference.

Two limits on capping are built in rather than left to be discovered. Liability for death or personal injury caused by negligence, and liability for fraud or fraudulent misrepresentation, cannot be excluded or limited. And a cap has to be reasonable to be relied on: for an individual client the fairness rules in Part 2 of the Consumer Rights Act 2015 apply to the term itself, and for business clients the Unfair Contract Terms Act 1977 reasonableness test bites on exclusions in written standard terms. A cap set at a token figure relative to the work is the kind of term that gets read down.

Statutory late-payment interest does not reach every client

Almost every set of accountants' terms reserves the right to charge interest on overdue fees under the Late Payment of Commercial Debts (Interest) Act 1998, and applies that reservation to the whole client base. The Act does not stretch that far. It implies a right to statutory interest — 8% above the Bank of England base rate, simple, running from the day after the due date — only where the purchaser and the supplier are each acting in the course of a business. A private individual who has asked you to prepare a tax return is not acting in the course of a business, so against that client the statutory route is unavailable and the clause does nothing.

This template asks who the client is and prints the right clause: the statutory-interest wording for business clients, and a plainly stated contractual rate for individuals. That is not a cosmetic distinction — an interest clause you cannot enforce is a clause you will be embarrassed by if you ever try to rely on it, and the fix costs one field.

Client money: there is no £25 rule unless your client agreed to it in writing

A very widely copied clause fixes a £25 interest threshold, below which the firm keeps the interest earned on client balances. ICAEW's Clients' Money Regulations contain no such de minimis. The default is that interest earned on a client's money belongs to that client, and an alternative treatment — for example accounting for interest only above a stated amount — is permissible because the client agreed to it in writing. That agreement has to actually exist, in the terms or the engagement letter, and the figure has to be visible to the client.

So this template treats the threshold as a client-facing figure you enter, not a house rule buried in a schedule. It also states the specific requirement most firms' terms leave as a vague reference to "a significant amount of interest": if you expect to hold £10,000 or more of a client's money for longer than 30 days, it must be held in an account designated for that client rather than pooled.

The whole client-money section is optional here, because a large proportion of practices never hold client money at all. If that is you, switching the section off produces a shorter, more honest document than carrying dormant clauses about trust accounts you don't operate.

Data protection wording written in 2021 is now wrong twice over

A great many UK accountancy terms still contain a sentence explaining that the European Commission approved the UK for adequacy in June 2021 and that this holds until a review in June 2025. Both halves of that are now historical. The 2021 decisions were extended on an interim basis in June 2025, and the Commission then renewed UK adequacy on 19 December 2025, with the renewed decisions running to 27 December 2031. The renewal followed the changes made by the Data (Use and Access) Act 2025, which is itself a reason to re-read any data-protection clause drafted before it.

This template does not restate the adequacy timetable inside the contract, because a dated statement of EU policy is precisely the sentence that goes stale and drags the rest of the document's credibility with it. What it does instead is name the current UK framework, state that the firm and the client are each independent controllers for the personal data they hold, allocate the lawful-basis responsibility for data the client passes to you, and give a named contact route — with the adequacy position covered in the guidance on this page, where it can be kept current.

The clauses worth keeping that most templates leave out

Three provisions appear in the terms of well-run practices and almost never in free templates. The first is a bank-detail fraud warning: a statement that you will never notify a change of bank details by email alone, that any email or call purporting to change them and not confirmed by post should be treated as fraudulent, and a request that the client give you their own account details by a second channel. Invoice-redirection fraud targets accountancy practices specifically, and this clause is the cheapest control available.

The second is a clause for internal disputes within a client. Where the owners of a business fall out, your client is the business, not whichever director rings you first. Saying in advance that you will not act on conflicting instructions, that you will refer the matter back to the board or the partnership, and that you will keep sending information to the registered office, saves you from being made the instrument of one side's argument.

The third is scope honesty about work that looks legal. If your firm is not licensed for the reserved legal activity of non-contentious probate, then estate administration and inheritance-tax work you take on is not covered by the ICAEW Probate Compensation Scheme, the client has no access to the Legal Ombudsman, and your advice does not attract legal professional privilege. Telling the client that up front is both a professional expectation and a genuine differentiator against templates that stay silent.

The terms, explained

Professional obligations and registrations

Names your professional body and where your registrations and professional indemnity details can be found, and — new for 2026 — records your registration with HMRC as a tax adviser under the Finance Act 2026 regime, plus your authority to correct HMRC errors you become aware of.

Professional indemnity insurance

Points the client to your insurer details. The Provision of Services Regulations 2009 split this in two: some information has to be made available generally, and insurance details have to be supplied on request — the clause reflects both rather than assuming a website line covers it.

Investment business and commissions

States that the firm is not authorised by the Financial Conduct Authority for investment business and will refer such work out, and — through a policy selector — whether commissions and third-party benefits are never accepted, disclosed and retained, or disclosed and rebated to the client. Silence on commissions is what generates complaints.

Client money (optional)

Switch on only if your practice holds client money. Covers the segregated trust account, the written-agreement basis for any interest threshold you apply, the £10,000-for-30-days designated-account requirement, prompt return of funds, and the treatment of money belonging to clients who cannot be traced.

Fees, disbursements and billing

Fee basis, what disbursements cover, the payment period, and a window in which the client must raise a fee they consider unreasonable. Setting a dispute window is what stops a stale objection surfacing months later against an unpaid invoice.

Interest on overdue fees

Prints statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 for business clients, and a stated contractual rate for individual clients — because the Act only reaches parties each acting in the course of a business.

Lien and handover costs

Reserves a lien over papers in your possession so far as professional rules permit, and makes clear that the reasonable cost of providing information to a successor firm falls to the client. Pair this with the disengagement letter, which is where the handover actually happens.

Personal guarantee (optional)

Most terms assert that the firm may pursue the individual who gave instructions if a company does not pay. That is not how it works — a director does not become liable for a company's debt because a term says so. If you want recourse, this optional block is an actual guarantee for that individual to sign.

Retention and destruction of papers

States the client's own statutory retention periods — six years from the end of the accounting period for companies and LLPs, and for individuals and partnerships five years and ten months after the end of the tax year where there is trading or rental income — then sets your own destruction period for correspondence and working papers, on notice.

Conflicts of interest and confidentiality

Reserves the right to act for clients with competing interests subject to safeguards, describes the safeguards in concrete terms rather than as a promise, and covers subcontractors and cloud systems explicitly — the two places confidentiality actually leaks.

Client identification and anti-money-laundering

Records that you are a relevant person under the Money Laundering Regulations 2017, that customer due diligence must be completed before the relationship starts and kept current, that you cannot proceed without satisfactory evidence, and that you may not discuss a suspicion report with the client.

Limitation of liability

A cap you actually state — fixed sum, multiple of fees, or fees paid — with the carve-outs that cannot be excluded (death or personal injury caused by negligence; fraud) written in rather than assumed.

Electronic communication and bank-detail fraud

Allocates the risk of email interception and corruption, and adds the specific anti-fraud undertaking that you will never change your bank details by email alone — with a request that the client give you theirs through a second channel.

Data protection

Treats firm and client as independent controllers, puts the lawful-basis obligation for data the client sends you on the client, and gives a named contact for data-protection queries. Deliberately avoids restating EU adequacy dates inside the contract, since those change.

Termination and immediate-cessation triggers

A notice period either way, plus the events that let you stop at once — insolvency, non-payment, or an uncured breach — and a pointer to the disengagement letter that should follow.

Internal disputes, third-party rights and applicable law

Confirms the business is the client where its owners disagree, excludes third-party enforcement under the Contracts (Rights of Third Parties) Act 1999, and sets the governing law and courts for England and Wales, Scotland, or Northern Ireland as you select.

Requirements checklist for a UK practice

Each item is a rule that shapes what your terms of business have to say. Confirm the current position for your own firm and professional body before you rely on any of it.

• Register with HMRC as a tax adviser, and hold an Agent Services Account

  Part 7 and Schedules 20 to 22 of the Finance Act 2026 make registration mandatory for any business paid to interact with HMRC about a client's tax affairs. Phased from 18 May 2026 for advisers with no ASA, 18 August 2026 for those with SA or CT agent accounts but no ASA, and 18 November 2026 for payroll-only agents. Interacting with HMRC unregistered can attract a £5,000 penalty rising to £10,000 per contravention, plus temporary or permanent ineligibility orders and publication of the adviser's details.

  Finance Act 2026, Part 7

• Hold qualifying professional indemnity insurance at the current minimum

  For ICAEW firms the minimum limit of indemnity rose from £1.5m to £2m on 1 September 2024. A firm with gross fee income under £800,000 needs cover of 2.5 times gross fee income subject to a £250,000 minimum, and the maximum aggregate excess is the higher of £3,000 or 3% of gross fee income. Firms above £50m gross fee income sit outside qualifying insurance but must have monitored arrangements.

  ICAEW — new PII regulations from 1 September 2024

• Make registration and insurance information available, and supply insurance details on request

  The Provision of Services Regulations 2009 remain in force. Regulation 7 covers contact details, regulation 8 lists information to be made available to recipients, and regulation 9 covers information that must be supplied on request, which is where professional indemnity insurance details sit. A pending amendment commencing 1 October 2026 deals with authorisation-scheme procedure and does not change these client-information duties.

  Provision of Services Regulations 2009

• Complete customer due diligence before the business relationship starts

  Accountancy service providers are relevant persons under the Money Laundering Regulations 2017. Regulation 27 requires due diligence when establishing a business relationship, and for occasional transactions of €15,000 or more. The separate €10,000 figure often quoted in terms of business is the high-value-dealer threshold that may apply to the client's own business, not to your due diligence — worth stating correctly rather than conflating.

  Money Laundering Regulations 2017, regulation 27

• Pass on interest earned on client money unless the client has agreed otherwise in writing

  ICAEW's Clients' Money Regulations set no de minimis for interest. Interest earned belongs to the client, and an alternative treatment such as a threshold is only available where the client has agreed to it in writing — which is what a terms-of-business or engagement-letter clause is for. Money held for a client that reaches £10,000 for more than 30 days must go into a separately designated account.

  ICAEW — clients' money regulations

• Do not rely on statutory late-payment interest against a client who is not in business

  The Late Payment of Commercial Debts (Interest) Act 1998 implies statutory interest, at 8% above the Bank of England base rate, only where the purchaser and the supplier are each acting in the course of a business. Against a private individual, an interest right has to be a stated contractual term instead.

  Penningtons — statutory interest under the 1998 Act

• Keep any data-protection clause current, and do not restate stale adequacy dates

  The European Commission renewed UK adequacy on 19 December 2025, running to 27 December 2031, following the Data (Use and Access) Act 2025. Terms drafted in 2021 typically state that the decision was under review in June 2025, which is now two renewals out of date.

  ICO — receiving personal information from the EEA

• Keep exclusions and caps within what the law allows

  Liability for death or personal injury caused by negligence, and for fraud, cannot be excluded or limited. Beyond that, exclusions in written standard terms with a business client are subject to the reasonableness test in the Unfair Contract Terms Act 1977, and terms used with an individual client are subject to the fairness regime in Part 2 of the Consumer Rights Act 2015.

  Consumer Rights Act 2015, Part 2

How to use this template

1. Identify the firm and the framework. Enter your practice name, firm type and professional body, the effective date of this version, and where clients can find your registration and insurance details.
2. Say who the client is. Choose business or individual. This drives the interest clause, and it is the field that decides whether your late-payment wording is enforceable.
3. Switch on only the sections you need. Client money, audit and assurance, probate-adjacent work, FATCA and Common Reporting Standard, subcontracting and cloud systems, and the optional personal guarantee are all separate switches. Leave off anything your practice does not do.
4. State a real liability cap. Pick a fixed sum, a multiple of the engagement fees, or fees paid, and enter the figure. Do not leave the cap to be found in another document.
5. Set your own fee, retention and notice figures. Payment days, fee-dispute window, any client-money interest threshold, how long you keep papers, notice to terminate, and the cure period for a breach.
6. Choose the governing law. England and Wales, Scotland, or Northern Ireland. The jurisdiction clause changes with it rather than defaulting to England.
7. Attach it to your engagement letter and download. These terms are accepted through the engagement letter that incorporates them, so issue the two together. Download as Word to keep editing, or PDF to send.

Frequently asked questions

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