Engagement letters and privacy notices

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 sample wording for engagement letters should be tailored to reflect individual situations. Given the need to apply professional judgement in tailoring engagement letters the use of AI software should be considered with caution. 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.

Other useful helpsheets

• Disengagement letters helpsheet
• Disengagement checklist helpsheet
• Practising certificates

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)

with optional paragraphs (Parts 3) and/or privacy notice (Part 5) added as necessary.

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.

• Download Part 1

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:

Auditing and accounting:

• A Acting as auditors under the Companies Act 2006
• B Preparation of statutory financial statements in compliance with the Companies Act 2006
• C Preparation of non-statutory financial statements in compliance with a financial reporting framework
• D Preparation and maintenance of accounting records

Taxation:

• E Personal tax – individuals, sole traders and couples
• E-A Personal tax - capital gains tax 60-day returns
• E-B Personal tax – individuals, sole traders and couples in MTD Income Tax
• F Trusts and estates tax returns
• G Partnership tax returns
• H Limited Liability Partnership (LLP) tax return
• I Corporation tax
• J A Payroll services (no off payroll working)
• J B Payroll services (includes off payroll working)
• K Benefits-in-kind returns
• L VAT Returns
• M Tax investigations
• N Unprompted taxation disclosures
• O Specialist or ad hoc tax advisory services
• P Schedule removed

Other:

• Q Reserved legal services and other related services by licensed/authorised firms
• R Cloud based services
• S Access to finance portal
• T Agreed upon procedures
• U A Acting as an Authorised Corporate Service Provider (ACSP) with ID verification services
• U B Acting as an Authorised Corporate Service Provider (ACSP) without ID verification services
• U GN Guidance on Acting as an Authorised Corporate Service Provider (ACSP)

Part 3 includes some additional wording that can be used to develop additional schedules or to include a limitation of liability clause in the engagement letter.

1. Corporate services
2. Consultancy services
3. Investment services
4. Consumer credit services
5. Limitation of liability
6. Alternative data protection clauses

• Download Part 3

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.

• Download Part 4

Part 5 gives 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.

• Download Part 5

Related guidance

Based on member feedback, related guidance has been kept separate to make it clearer and easier to access the sample wording. The related guidance can be downloaded separately.

Topics covered in related guidance include:

• Ethical and regulatory requirements
• Enforceability and consumer rights
• Data protection and GDPR
• Legal services
• Limitation of liability
• Artificial Intelligence
• Specific scenarios
  • Acting for a group
  • Change in status of practitioner
  • Investment business
  • Insurance distribution services
• Further resources

• Download related guidance

What has changed in this helpsheet

The table linked to below shows which sections of the helpsheet were added or amended in May 2022:

• View summary of changes May 2022
• View summary of changes May 2023
• View summary of changes March 2026

How to use the sample wordings

According to the nature of the engagement and client type, select the appropriate text sections to form the basis of your engagement letter. Adapt the model language to suit your circumstances. We suggest that, for greater clarity, you use the sample subheadings as section headings in your letter.

Within the helpsheet, guidance and instruction are shown in italics. None of this italicised text is for inclusion in your engagement letters and you should be careful to ensure that it is removed from the final copy.

In some paragraphs we have provided optional or alternative wording. This is shown in [square brackets] and each suggestion requires your individual consideration and possible amendment.

We have marked with an asterisk* those areas where your firm may or may not be offering some parts of the services and, again, each reference will need to be considered for its relevance to the specific engagement.

If additional specific information needs to be added, such as a name or year end, this is indicated by a dotted line: .................

Other example engagement letters

The Library & Information Service can provide additional examples for a range of different client types. This guidance relates to typical general practice work in the areas of accounting, auditing, taxation and advisory services undertaken by members. For industry-specific engagement letters for common practice services (eg solicitors, charities, ATOL reporting, trusts, etc.), guidance can be found in industry-specific publications and manuals. 

The Library & Information Service holds a wide range of publications and engagement letters and can sometimes provide a relevant example. T +44 (0)20 7920 8620 or E library@icaew.com