Let’s face it, few accountants have detailed procedures in place to ensure they do all they need to do when they lose a client. The simple reason for this is that it doesn’t happen often enough to warrant a detailed procedure and even when it does occur there’s rarely a problem.

The larger firms lose more clients across the board and tend to have procedures in place to reduce the prospect of problems arising down the line. One of these procedures is a proforma disengagement letter.

This is a concept that I frequently advocate during my talks on ‘How to avoid professional negligence claims and worse’. Simply stated the use of such letters can help minimise the prospect of continuing liability to ex-clients and also to those who do not reply to requests eg: for information required to complete tax returns or accounts.

What should be addressed in a disengagement letter? I suggest the following:

  • A summary of services provided up to the date of ceasing to act;
  • A note of any further action to be taken by the adviser;
  • A note of any outstanding matters that either the ex-client or the new advisers will need to address;
  • Details of any impending deadlines and the action required;
  • The adviser’s willingness or otherwise to assist the new advisers resolve outstanding issues with HMRC or others; and to provide copy papers to the new advisers or to allow them access to files;
  • If relevant, details of any outstanding fees; and finally
  • A note indicating that the adviser has told HMRC that he is no longer acting for the client and that until further notice all correspondence should be sent only to the taxpayer.

Anything else? Please share your veiws as comments on this blog post.