top stories

Two new technical factsheets focus on engagement letters for tax practitioners and the enforceability of engagement letters. 

Enforceability of Engagement Letters
Technical factsheet 174 Enforceability of Engagement Letters highlights the circumstances where the conditions in an engagement letter could be unenforceable by a practitioner but where clauses could be enforceable by a client. 

The factsheet states that ‘failure to comply with the regulations therefore may mean that, not only will the practitioner be unable to enforce payment of outstanding fees, but also that any limitation of liability included within the engagement letter would not be effective.’ 

It is therefore important that practitioners are aware of the relevant regulations and take steps to comply with them. The regulations are: 

• The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008 (‘Cancellable contracts’);
• The Consumer Protections (Distance Selling) Regulations 2000 (‘Distance selling contracts’). 
  
  The factsheet provides an overview of the regulations and simple flowcharts to help practitioners assess any risk and consider if any new procedures are required. 

Engagement letters for tax practitioners
Technical Factsheet 173 Engagement Letters for Tax Practitioners is updated joint guidance issued by the main tax and accounting bodies. 

Amendments have been made to the foreword, guidance notes to the appendices and Appendix C – standard terms and conditions of business only. An additional Appendix D has also been inserted covering disengagement letters. All other appendices remain unchanged. New subjects covered in this edition are: 

• the Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008;
• Consumer Protection (Distance Selling) Regulations 2000;
• services directive;
• iXBRL tagging;
• disengagement letters. 

And the topics for which the guidance or recommended text has been changed include: 

• acting as a guarantor – wording expanded;
• limitation of liability – wording expanded and some text moved from the standard terms & conditions to the covering letter;
• limitation of third party rights – wording expanded.

Practitioners are encouraged to review their existing engagement letters annually and update as appropriate. Where practitioners use the engagement letter and schedules developed by the joint bodies they should tailor them to suit their practice.

Back to top