Dear Partner,

The purpose of this letter is to set out the basis on which we are engaged to:

(a)  act as accountants to prepare the partnership’s annual accounts;
(b)  prepare and file the partnership’s annual tax returns;
(c)  prepare VAT returns;
(d)  provide bookkeeping services;
(e)  process payroll;
(f)   provide other professional services to the partnership.

And to set out the respective responsibilities of the partners and ourselves.

1.    Responsibilities of partners and accountants

a.    You are responsible for preparing accounts which are adequate to enable profits to be calculated such as to meet the requirements of current tax legislation and which provide sufficient and relevant information to enable the completion of a tax return.

b.    You are responsible for keeping adequate accounting records that set out with reasonable accuracy at any time the business’s financial position, and for ensuring that the accounts comply with the measurement principles of United Kingdom Accounting Standards.

c.    Our appointment does not exonerate you from your legal responsibilities. Failure to do so may lead to automatic penalties, surcharges and or interest. The person approving any returns or documents cannot delegate their legal responsibility to others. The person approving any returns or documents agrees to check such are accurate and complete before they approve it.

d.    You have undertaken to make available to us, as and when required, all the partnership’s accounting records and related financial information. You will make full disclosure to us of all relevant information that we need to do our work.

e.    We have a professional responsibility not to allow our name to be associated with accounts that may be misleading. Therefore, although we are not required to search for such matters, should we become aware that the accounts may be misleading we will not issue any form of report and will notify you in writing of the reasons.

f.     As part of our normal procedures, we may request you to provide written confirmation of any information or explanations given by you orally during the course of our work. In carrying out our work we shall rely on the source records produced to us by the partnership and partners.

g.    You will forward to us HMRC statements of account, copies of notices of assessment, letters and other communications received from HMRC in time to enable us to deal with them as may be necessary within the statutory time limits. Although HMRC have the authority to communicate with us when form 64-8 has been signed and submitted it is essential that you let us have copies of any correspondence received because HMRC are not obliged to send us copies of all communications issued to you.

2.    Scope of our work

a.    ACCOUNTS

You have asked us to assist you in the preparation of the annual accounts. We will compile these accounts based on the accounting records maintained by you and the information and explanations given to us by you. We shall prepare draft annual accounts for your approval. We shall plan our work on the basis that no assurance report on the accounts is required. In carrying out our engagement we will make enquiries of management and undertake any procedures that we judge appropriate but are under no obligation to perform procedures that may be required for assurance engagements such as audits and other assurance assignments.

b.    TAX RETURNS

We will prepare the partnership’s tax returns from the accounts, information and explanations provided to us on your behalf. We will file the annual tax returns on your behalf.

If you wish us to prepare and file individual tax returns for each partner, we must be engaged separately for such services.

c.    VAT

We have agreed to prepare VAT reporting and to submit VAT returns on your behalf on the basis of the information and explanations supplied by you.

We will tell you how much VAT you should pay and when. If appropriate we will initiate repayment claims where VAT has been overpaid. We will advise on the interest and penalty implications where VAT is paid late.

We will submit the MTDfV returns online to HMRC after the date to be included therein has been approved by you.

We will deal with all communications relating to your VAT return addressed to us by HMRC or passed to us by you. However, if HMRC choose your return for enquiry this work may need to be the subject of a separate assignment in which case we will seek further instructions from you.

d.    BOOKKEEPING

You have asked us to assist you in fulfilling the duty of keeping adequate accounting records. We will advise you as to the adequacy of any accounting that you have maintained and make recommendations for improvements.

We have agreed to provide you with bookkeeping services which are standard for a partnership.

e.    PAYROLL

We will prepare your UK payroll for each payroll period to meet UK employment tax requirements. If the information required to complete the payroll services is received less than 2 working days before the payroll date we will still endeavour to process the payroll and returns to meet the agreed payroll date and filing deadlines but we will not be liable for any costs or other losses arising if the payroll is late in these circumstances. We may charge an additional fee of £50 for work carried out in a shorter time period.

3.    Our fees

a.    Our fees are computed on the basis of the time spent on your affairs and the level of skill and responsibility involved and are excluded of any applicable taxes.

b.    Any disbursements we incur on your behalf and expenses incurred in the course of carrying out our engagement will be added to our invoices where appropriate.

c.    Unless otherwise agreed, our fees will be charged separately for each of the main classes of work, and will be billed at appropriate intervals during the course of the year.

d.    You shall pay our bill within 30 days of the date of each invoice. In the event such payment is not made within 30 days, unless you meet the definition of a consumer, we reserve the right to charge interest on overdue accounts at the current rate under the late Payment of Commercial Debts (Interest) Act 1998. We also reserve the right to terminate our engagement by giving written notice if payment of any invoice is unduly delayed. We intend to exercise these rights only where it is fair and reasonable to do so.

e.    Any payment plan intended to clear invoices in arrears must be confirmed in writing and approved by a senior manager of both parties. Such payment plan will be terminated immediately upon failure to pay a scheduled payment unless we receive a notice of delay at least 2 days before payment is due and we agree on a new payment date. If a payment plan is terminated due to lack of payment of any instalment, all pending fees and overdue invoices will become due immediately.

4.    Data Protection

The Data Protection Act (DPA) 2018 as amended by the Data Protection, Privacy and Electronic Communications (Amendment etc.) (EU Exit) Regulations 2019 contain a number of requirements in relation to the processing of personal data.

We take your privacy and the privacy of the information we process very seriously. We will only use your personal information and the personal information you give us access to under this engagement to administer your account and to provide the services that you have requested from us.

Any personal data received from you to comply with our obligations under The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as amended (MLR 2017) will be processed only for the purposes of preventing money laundering or terrorist financing. No other use will be made of this personal data unless use of the data is permitted by or under an enactment other than the MLR 2017, or we have obtained the consent of the data subject to the proposed use of the data.

We will communicate or transfer data using the following means: post; password-protected emails; encrypted emails; portals – TaxCalc, e-sign; cloud-based software – Quickbooks, SAGE, XERO, Kashflow, etc.; emails which are neither password-protected nor encrypted; telephone.

If you require us to correspond with you by email that is neither encrypted nor password protected, you agree to accept the risks associated with this form of communication.

5.    General provisions

a.    Once it has been agreed, this letter will remain effective, from year to year, until it is replaced.

b.    This letter represents the entire agreement between the parties and supersedes all prior discussions, negotiations, and agreements.

c.    We will provide our professional services with reasonable care and skill. Our liability to you is limited to losses, damages, costs and expenses caused by our negligence, wilful default or breach of contract. However, to the fullest extent permitted by law, we will not be responsible for any losses, penalties, surcharges, interest or additional tax liabilities arising from the supply by you or others of incorrect or incomplete information, or yours or others’ failure to supply any appropriate information (at all or on a timely basis) or your failure to act on our advice or respond promptly to communications from us or any public sector body (such as HMRC, Companies House etc.). You agree to hold harmless and indemnify us, our principals, subcontractors, consultants, agents and staff, to the fullest extent permitted by law, for any loss suffered by you arising from any misrepresentation (intentional or unintentional) provided by you orally or in writing in connection with this agreement. You have agreed that you will not bring any claim in connection with services we provide to you against any of our principals, subcontractors, consultants, agents or staff personally.

d.    This engagement letter shall be governed by, and construed in accordance with, English law. The courts of England shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning this engagement letter and any matter arising from it. Each party irrevocably waives any right it may have to object to an action being brought in those courts, to claim that the action has been brought in an inappropriate forum, or to claim that those courts do not have jurisdiction.

e.    Either party may terminate this agreement upon giving 30 days' written notice to the other party. In the event of termination, the parties shall be released from their respective obligations, except that all payment obligations accrued prior to termination shall survive. Notwithstanding the foregoing, either party may terminate this agreement immediately upon written notice to the other party in the event of a material breach by the other party which has not been remedied within 15 days of notice.

f.     Should we cease to act for you, we will normally issue a disengagement letter to ensure that respective responsibilities of both parties are clear. This will also help in ensuring an efficient handover between professional advisers. Should we have no contact with you for a period in excess of one year we may issue a disengagement letter to your last known address and hence cease to act.