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TECHNICAL ADVISORY SERVICES HELPSHEET

Engagement letters and privacy notices

Helpsheets and support

Published: 01 Jul 2016 Updated: 07 Apr 2021 Update History

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ICAEW has developed guidance for practice firms on what to include in engagement letters. This page provides a series of sample wordings to help you draft your own engagement letters.

Data protection now the UK has left the EU: February 2021 update

The EU Commission has issued a draft decision that the UK will be granted a full adequacy decision which will enable data flows from the EU/EEA to continue as they did when the UK was in the EU. However the European Data Protection Board still has to formalise this and will not do this before it has consulted with member states . In the meantime members can continue to receive data from the EU/EEA as outlined in our January 2021 update but are reminded that these are temporary arrangements in place until a final decision on adequacy is determined or 30 June 2021, whichever is soonest. We will update members when we can but members are also advised to regularly check the ICO website for details of the latest developments.

Issuing an engagement letter?

If you are issuing a letter of engagement, consider carefully whether you need a practising certificate. Practising without a practising certificate in the UK or the rest of the EEA can result in disciplinary action. Find out more about the requirements and the key matters you need to consider when setting up in practice.

Furlough Grant Claim Schedule

To support firms who are providing services to clients in making furlough grant claims, an additional engagement letter schedule has been created. This schedule is based on our understanding of the scheme as at 3 March 2021 and may be subject to change. For the latest information on the scheme refer to icaew.com/coronavirus.

This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members in practice when preparing an engagement letter for their services to a client.

This helpsheet explains the importance of considering the various areas of the relationship between advisors and their clients and issuing engagement letters with a view to safeguarding against risks that might arise. To help members put in place appropriate terms of engagement, it provides a series of sample wordings for a variety of typical engagements for both corporate and non-corporate clients. The helpsheet brings together more typical engagements to encourage a consistency of approach when dealing with engagement letters and to help members manage associated risk.

The helpsheet provides best practice guidance. It does not constitute a professional standard. Given that the type of service provided and the nature of client will vary from engagement to engagement, professional judgement should be used in applying this helpsheet and the example wording for engagement letters needs to be tailored to reflect individual situations. The helpsheet is not intended to provide comprehensive advice for the preparation of engagement letters and you should refer to additional sources of information where appropriate, including legal advice if necessary.

The full engagement letter helpsheet

The engagement letter helpsheet is separated into several parts that together will comprise a complete engagement letter.

A complete engagement letter will comprise:

  • an engagement letter (Part 1)
  • schedules of the service(s) to be provided (Part 2)
  • terms of business (Part 4)
  • privacy notices (Part 5)

The individual parts,including the guidance notes for Part 2J, are also available as separate downloads.

You are advised to read the related guidance which is an important part of the helpsheet. 

Separate engagement letter schedule sample wordings

A complete engagement letter will comprise:

  • an engagement letter (Part 1)
  • schedules of the service(s) to be provided (Part 2)
  • terms of business (Part 4)
  • privacy notices (Part 5)

Part 1 of this helpsheet provides draft text of an engagement letter for services provided to individuals, unincorporated businesses, partnerships, limited companies registered under the Companies Act, and limited liability partnerships.

Part 2 provides schedules covering auditing, accounting, taxation and probate work. Additional schedules can be added to cover other services you provide.

Download individual schedules:

Part 3 includes some additional wording that can be used to develop additional schedules, have limited applicability or are alternative clauses.

Part 4 sets out example terms of business (including GDPR clauses for data controllers) which are referred to in the example engagement letter wording. Where a firm has terms of business, they should always accompany and be incorporated into the engagement letter. Provision has been made for dating the terms of business so that it is clear which terms of business have been applied, as they may be updated from time to time.

Part 5 includes a short form template privacy notice which has been drafted on the basis that you/your firm will be collecting certain personal data (such as name and contact details) for the purpose of supplying your products and/or services; communicating with your clients in relation to those products and/or services; and undertaking marketing in relation to the products and services.

Related guidance has been moved to the end of the helpsheet, based on member feedback to make it clearer and easier to access the sample wording.

What has changed in this helpsheet

The table linked to below shows which sections of the helpsheet were added or amended in May 2021:

Other useful helpsheets and resources

Other useful helpsheets

Other resources

The Library & Information Service holds a wide range of industry specific publications and alternative engagement letters. They can usually provide additional examples not covered in this helpsheet. Telephone +44 (0)20 7920 8620 or email library@icaew.com

Terms and conditions

© ICAEW 2021  All rights reserved.

ICAEW cannot accept responsibility for any person acting or refraining to act as a result of any material contained in this helpsheet. This helpsheet is designed to alert members to an important issue of general application. It is not intended to be a definitive statement covering all aspects but is a brief comment on a specific point.

ICAEW members have permission to use and reproduce this helpsheet on the following conditions:

  • This permission is strictly limited to ICAEW members only who are using the helpsheet for guidance only.
  • The helpsheet is to be reproduced for personal, non-commercial use only and is not for re-distribution.

For further details members are invited to telephone the Technical Advisory Service T +44 (0)1908 248250. The Technical Advisory Service comprises the technical enquiries, ethics advice and anti-money laundering helplines. For further details visit icaew.com/tas.

Changelog Anchor
  • Update History
    07 Apr 2021 (12: 00 AM BST)
    Changelog created, helpsheet converted to new template
    07 Apr 2021 (12: 01 AM BST)
    Part 2 L VAT – was previously 2 schedules – “A” (non-MTD) and “B” (MTD). Now spit into 4 schedules in total (GB and NI variants of above ) Other schedules updated: Part 2 E – Personal tax Part 2 F – Trusts and estates Part 2 G – Partnership tax Part 2 H – LLP tax return Part 2 I – Corporation tax Part 2 J-A – Payroll services (no off payroll working) Part 2 J-B – Payroll services (includes off payroll working) Part 2 O – Ad hoc tax advisory All of the above have been incorporated into the complete download document
    06 May 2021 (12: 00 AM BST)
    Schedule Part 2 J-C Furlough grant claims updated to reflect changes to the scheme
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