How professional clearance works when switching accountants

If you’ve decided to say goodbye to the old and hello to the new, where should you start when switching accountants, and how does the handover work in practice – aka professional clearance?

Here, Christian Hickmott, Managing Director of Integro Accounting explains how the switching process works – both for you (the client) and between accountants. The key is to make the transition as smooth and stress-free as possible!

How to tell your accountant you’re leaving

Assuming you’ve done your research and have chosen your new accountant, the first step would be to give your current accountant (or what we’ll refer to in this article as your previous accountant) notice in writing that you’ll be leaving.

Of course, it’s helpful if you can give them reasons, and you might want to talk it through on the phone too – this way you can discuss anything you’d like them to complete (or not) before the handover.

If you’ve been particularly disgruntled by poor service, it’s understandable that you may want to leave as soon as possible, but if you’re not in such a hurry, think about what you’ve already paid them for.

Do you have any company accounts or tax returns due imminently that you’d still like them to complete?

Once this has been ironed out, they should send you a disengagement letter that formally sets out these details, so you know exactly what they’ll be working on and where your new accountant will pick up.

The professional clearance process

When you move between professional accountants, your new accountant will normally contact the previous firm as part of the professional clearance process.

How professional clearance works

They’ll write to your previous accountant in the form of a professional clearance request letter, but they should only do this once you’ve given them the go-ahead.

This will usually take place once you’ve already notified them you’re leaving, so there are no surprises and they’ve no excuse not to start getting things ready.

The letter will ask whether there is any reason the accountant cannot or should not accept the appointment.

Accountants who are members of professional bodies are generally required by their professional rules to respond.

For example, the previous accountant may need to disclose relevant concerns about suspected fraud, tax irregularities or misleading information.

While this sounds ominous, it’s a matter of process and something professional accountants should do for compliance reasons.

What information is transferred

The professional clearance letter will also request the handover of relevant information to carry out the work.

This includes HMRC references, your Companies House authentication code, previous tax returns, VAT and payroll submissions, and so on.

The outgoing accountant should provide the information and records the new accountant is entitled to receive. Internal working papers don’t automatically belong to the client and don’t necessarily have to be handed over.

They may also divulge to your new accountant if there have been any pay disputes between you and them, and it’s at the discretion of the new accountant to decide whether they will take you on as a client based on the information given.

It’s unlikely you will be turned away unless, of course, there are some serious concerns, of which you should be aware before they arise.

The previous accountant should respond promptly and cannot refuse to answer simply because fees are outstanding.

Unfortunately, some accountancy firms might delay matters, so it’s a good idea to get all fees up to date. Whether additional records or working papers can be withheld may depend on the type of document and the professional rules that apply.

The information will be sent via email or post, and once received, and assuming there are no issues, the new accountant should be ready to formally engage you as a client.

3 tips for a smooth accountant switching process

1. At Integro Accounting, we aim to have accounts switched over within one month, subject to receiving the right information from the previous accountant. We will request this as soon as we have your authority, with any chasers as appropriate. A little nudge from you to your contact at your old firm can help, too. If you already have copies of anything your new accountant has requested – your Company UTR, for example – send these over too.
2. Be aware of the contract with your previous accountant, paying attention to any notice period and whether you are tied to paying for a certain period.
3. Ensure your disengagement letter is clear and understood – if you’re clear on what they are and aren’t doing, you can make your new accountant aware of what you need them to complete. If there’s some extra ad-hoc work that needs doing, at least you’ll have a view of any extra costs involved from the beginning.

Engaging your new accountant

When formally appointing your new accountant, you should be sent an engagement letter to sign outlining the service you will receive, the date it will start, fees, terms and conditions, and so on.

You should also be clear on what your accountant is responsible for – see accountant duties and responsibilities.

Your new accountant will also carry out identity and other client checks as part of their anti-money laundering obligations.

They will also need the appropriate authority to deal with HMRC on your behalf. See our guide to authorising your accountant to deal with HMRC.

Some accountants may ask you to sign this documentation before they contact you for professional clearance. Some may charge a switcher fee due to the work involved in switching accounts and taking over your bookkeeping software access, for example.

Further reading

• You can read Integro Accounting’s guide to switching accountants here.
• How do catch-up fees work when you join a new accountant?
• When is the best time to move accountants?