Share this content
0
4
3547

Notice period to terminate client relationship?

I am just revising my templates of letters of engagement for the coming year and wondered if it is standard practice to put it something about a notice period to terminate the relationship with a client? (I ask as a potential client seemed quite nervous about there being no terms stated, I think they were worried that they may be getting into something that they couldn't get out of.)  I know that in contracts of employment it is usual to state a period of notice but haven't seen anything similar in various template letters or letters from other accountants.  I have thought of stating that the arrangement could be terminated with one month's notice in writing but wondered what other people do?  All help / suggestions gratefully received.

Replies

Please login or register to join the discussion.

By Hansa
29th Apr 2012 23:02

minimal notice (maybe 7 days)

I don't think you can require a client to remain a client if he decides to move.  Likewise, if you (for whatever reason) don't wish to keep a client you should not feel obliged to.  Therefore I think 7 days is enough time, either side, to terminate a relationship (in practice it's on receipt).

A couple of caveats though.  If you provide, for example, RO/CoSec services you would not I think be expected to refund pro-rata (the service is annual) if the client leaves you.  Where, however,  you "sack" the client, I think it would be reasonable to give the client a little time to find an alternative RO or CoSec and not stick rigidly to 7 days AND you should pro-rata the fees charged.  

You may also consider it prudent to put in a "time spent" clause to allow your time in preparing files etc for handover to be chargeable  (excluding of course work already billed for).

Thanks (2)
avatar
30th Apr 2012 08:32

Yes
Similar to Hansa.

I personally have no notice either way and a time charged since last bill clause.

Thanks (1)
30th Apr 2012 09:40

Thanks for the feedback.

Thanks for the feedback, a nice quick response that has helped me clarify matters.

Thanks (0)
01st May 2012 12:00

There is some guidance about this

The UK tax profession 'Engagement Letters for Tax Practitioners' guidance (endorsed by all the relevant professional bodies) says

http://www.tax.org.uk/NR/rdonlyres/B9F70448-5587-4792-8512-196EAA0A428A/0/engagementletters.pdf:

"The covering letter or the standard terms and conditions should make clear when an engagement begins and when it ends. Practitioners should not cease to act for a client without giving them notice in writing, unless compelled to do so by law." (para 82)

The example 'Standard Conditions & Terms of Business' (Appendix C) includes the following provision:

"Unless otherwise agreed in the engagement covering letter our work will begin when we receive your implicit or explicit acceptance of that letter. Except as stated in that letter we will not be responsible for periods before that date.

Each of us may terminate this agreement by giving not less than 21 days notice in writing to the other party except where you fail to cooperate with us or we have reason to believe that you have provided us or HMRC with misleading information, in which case we may terminate this agreement immediately. Termination will be without prejudice to any rights that may have accrued to either of us prior to termination.

In the event of termination of this contract, we will endeavour to agree with you the arrangements for the completion of work in progress at that time, unless we are required for legal or regulatory reasons to cease work immediately. In that event, we shall not be required to carry out further work and shall not be responsible or liable for any consequences arising from termination." (para 20) 

Thanks (1)