Not acting for personal tax

Issue disengagement letter?

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I have recently watched a video explaining a live practice visit and am looking hard at my own files.

I have several clients who signed an engagement letter for personal tax but now no longer want me to do their personal tax returns.

These engagement letters are getting rather old, and I think I should issue a disengagement letter to them, although obviously explaining that I will send a new engagement letter if they require my services in future.

Is that the sort of thing a practice regulator would want me to do? 

Do you think it's a good idea?

Replies (10)

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By Truthsayer
01st May 2023 11:45

Yes and yes.

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By Ruddles
01st May 2023 11:52

I guess the answer to the first depends on who the regulator is, but the answer to the second is a definite yes. EDIT - that is now a definite maybe, see below.

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By Roland195
01st May 2023 11:53

Yes and Depends - Are we talking about clients you continue to represent in other areas?

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By Wanderer
01st May 2023 11:54

If I had evidence on file that they no longer wish me to act then not sure I'd bother.

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Replying to Wanderer:
By Ruddles
01st May 2023 12:06

The main benefit of a disengagement letter is that it clearly draws a line re responsibilities. It avoids any dispute as to who, for example, is going to be responsible for filing returns, claims etc for periods ended before the disengagement date.

I am going to amend my response above - a disengagement letter is probably more appropriate when the client is leaving. If they are remaining a client, but dropping certain services, then it should be fine to issue a revised LoE setting out the scope of future services (but again making it clear as to who will be responsible for any outstanding matters prior to the change).

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By I'msorryIhaven'taclue
01st May 2023 12:09

Moonbeam wrote:

Is that the sort of thing a practice regulator would want me to do?

Yes. The vogue is to disengage, and re-engage as and when. I suppose it makes sense from a contractual liability / PII viewpoint, given there's potential for tort of negligence action not only for an act bit also an omission (ie a failure to act). Having HMRC statements and the like turning up in the post for clients who are dead parrots could I suppose catch you out.

I daresay from your supervisor's point of view there's a perceived exposure to AML risk, by not re-identifying and re-assessing the client risk every other Tuesday.

Moonbeam]</p> <p>[quote=Moonbeam wrote:

Do you think it's a good idea?

No. Our letters of engagement covered dormant periods, and contractually put the onus on the client to rekindle the relationship rather than on us to be proactive.

Some of our "occasionals" were clients' spouses, so disengaging was a poor PR move. On the other hand client ID procedure, verification, assessment and and LofEs doesn't take long these days, so life's simpler if you just roll with it.

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By Winnie Wiggleroom
01st May 2023 19:05

Are you not meant to periodically ask a client to re-sign a LOE? If you did that presumably the latest one would not include personal tax. Seems to me thats the obvious solution.

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By Moonbeam
02nd May 2023 14:35

Sorry - I was talking about clients whose limited company I act for. I can't send a new engagement letter to individuals who no longer require me to do their tax returns as that's the only thing I was engaged for previously.

However, as usual your comments are very clear and helpful.

I think I will send these people a disengagement letter, making it clear they are welcome to request me to act for them in future, triggering a new LOE in that case and stating that I will no longer be their tax agent or have any further responsibilities.

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By CardiffAccountant
03rd May 2023 19:50

Am I missing something here?

If a ‘client’ emails me and says ‘thanks for everything, but I have decided to go elsewhere’, then surely a letter of disengagement is a bit pointless.

No doubt the new accountant will send a Letter of Processional Clearance, and I will provide all requested info.

Now, if I’m getting shot of a PITA client, that’s an entirely different thing.

A full disengage letter, with all the bells and whistles. No doubt, if they have been a PITA, then any problems they may encounter will be blamed on me/you.

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Replying to CardiffAccountant:
By Ruddles
03rd May 2023 20:28

What happens if you have just started to prepare the 2023 SATR?

What happens if assets have been gifted and s165 elections are to be considered?

What happens if the accounts to 31 Dec 22 have been prepared but yet to be filed?

Etc etc etc

In other words, who will be responsible for dealing with all those matters, and how will those responsibilities be evidenced?

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