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Updating engagement letter for RTI

Updating engagement letter for RTI

I am currently updating my engagement letters, using the ICAEW template.  However this makes no reference to RTI in the payroll services section.  Does anyone know of an updated template engagement letter which does make reference to RTI? 

Thank you.

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24th Feb 2013 11:51

Why bother?

This came up last week.

No-one disagreed with me, but on second thoughts, I have somewhat changed my mind.  Does your current engagement letter mention that you might file the annual accounts of a company at Companies House by internet in the iXBRL format?  Does your current engagement letter mention that you file the CT600 with HMRC by internet in iXBRL format along with accounts in iXBRL format?  Does your current engagement letter mention that you file VAT returns online or by internet from your book-keeping software?

I really do not think that the method of complying with the filing requirements is of any relevance to the client.  It suffices that your letter of engagement states which of the client's various filing obligations you undertake to perform on behalf of the client, not the specific method of delivery.

 

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25th Feb 2013 16:03

Scary Penalties

The penalties for RTI after the first year are rather scary.  I can see that £1200 penalties won't be that unusual.

An engagement letter should set out what the client needs to provide to you, and more importantly when.  I think both parties need to be clear on this as once the penalty notices 'hit the fan', clients have a habit of looking to see who they can blame!

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24th Feb 2013 12:34

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Thanks for the link Euan - I had done a search before I posted but the thread you refer to had not come up in the results.

I appreciate that the method of delivery of statutory returns is not essential to include in the engagement letter.

However, the current ICAEW template includes in the payroll section sentences such as "We will submit your forms P35 and P14 after they have been approved."  As far as I am aware, there will no longer be a form P35 and P14, so I wondered what wording others used instead, in this case.  Simply leave out the specific references altogether and refer to "filing requirements" or similar?  

I pay a hefty subscription fee to the ICAEW, and would prefer to use their template, which someone has spent considerable time putting together, than spend considerable time coming up with my own version!  But their payroll section does appear to be nearly out of date, and as I am reviewing my engagement letters in any case, felt that it would be appropriate to amend the wording of this section to reflect the new arrangements for RTI.

 

 

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24th Feb 2013 13:10

Hmmmm........

sparkler wrote:

I pay a hefty subscription fee to the ICAEW, and would prefer to use their template, which someone has spent considerable time putting together, 

I too pay a hefty subscription fee to the ICAEW a large part of which goes to pay their staff who clearly have to justify their existence. What better way to do this than by updating their templates whenever they can.

That does not mean however that you should slavishly follow what ICAEW does. If your current engagement letters will be incorrect when RTI comes in, then a change is clearly necessary, otherwise, why bother?

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24th Feb 2013 13:48

Not a slave - just making use of resources!

nigelburge wrote:

That does not mean however that you should slavishly follow what ICAEW does. If your current engagement letters will be incorrect when RTI comes in, then a change is clearly necessary, otherwise, why bother?

[/quote]

I am incorporating my practice and had considered asking clients to sign a novation letter.

However, as my current engagement letter is out of date (it hasn't been updated for several years), I decided that it would be a good idea to update the whole letter using the most recent ICAEW wording before incorporation, and get clients to sign a new engagement letter rather than a novation letter.

I do not slavishly follow what ICAEW does - I simply wanted to save time by using their letter rather than writing my own.

 

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24th Feb 2013 16:30

Out of date ?

sparkler wrote:

However, as my current engagement letter is out of date (it hasn't been updated for several years), I decided that it would be a good idea to update the whole letter using the most recent ICAEW wording before incorporation, and get clients to sign a new engagement letter rather than a novation letter.

Your standard letter may not have been updated for several years, but that does not mean that it is no longer fit for purpose and needs to be updated.  However, I certainly think that you should ask clients to sign a new letter in the name of your limited company.

Presumably, the ICAEW's excuse would be that as RTI has not yet been introduced, they have not amended their model letter.

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25th Feb 2013 09:13

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I updated mine for the very reasons above about the forms, however we do ours as appendicies per tax, so its just one sheet that has changed that is going in with the 2012/13 PAYE packs. 

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01st Mar 2013 15:55

New guidance from ATT, CIOT and ICAEW

The payroll services standard engagement letter issued by these three professional bodies has just been updated to encompass RTI.

It's an interesting debate about how detailed you make your LoEs, but there are likely to be so many dropped balls and mistakes in the months ahead that it may well be worth going into specifics. Doing so might also assist you and the client in working out the steps you need to take.

Vaughan makes a good point about penalties, too. The penalty regime for RTI (when it comes fully into force) carries the potential threat of cumulative penalties up to £1,200 for lateness and inaccuracies. The updated letter template from the three tax bodies confirms: "Employers cannot delegate this legal responsibility to others. You agree to check that submissions that we have prepared for you are correct and complete before you approve them.

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