A professional clearance letter is the letter a new accountant sends to the previous accountant, with the client’s written consent, asking whether there is anything they should know before accepting the appointment and requesting handover information. ICAEW calls it a “professional enquiry”, because the outgoing accountant cannot grant or refuse permission to act.
In short: get the client’s written authority, send a professional clearance letter to the existing accountant asking for any matters relevant to your decision to act, request the handover information you need, chase after a reasonable period, then send a tracked final letter. The decision to accept is yours, and you still complete your own AML checks.
Key points
- ICAEW and ACCA both require the incoming accountant to communicate with the existing accountant for recurring work, under section 320 of their codes of ethics.
- Client consent, preferably in writing, comes before any professional clearance letter. Without it neither accountant can discuss the client’s affairs.
- Outstanding fees are not a reason for the outgoing accountant to ignore the enquiry, although a lien may delay the return of records.
- Never ask whether the previous accountant has reported money laundering suspicions.
What is a professional clearance letter?
A professional enquiry (commonly called professional clearance) is the incoming accountant’s written request to the existing accountant for any information that might affect the decision to accept an engagement. ICAEW’s helpsheet for incoming accountants states that “professional clearance” is a misnomer: the existing accountant has no authority to give or withhold clearance, and the decision to accept appointment rests with you (ICAEW, change of professional appointment: incoming accountant).
ACCA’s Code of Ethics and Conduct explains that the main purpose of the communication is to make sure there has been no action by the client that would, on ethical grounds, prevent you from accepting the appointment (ACCA Rulebook, Code of Ethics and Conduct, section 320). HMRC’s standard for agents also expects agents to make relevant documents and information from former clients available to new advisers when they are entitled to see them (HMRC, the standard for agents, section 4.3.3).
When to send a professional clearance letter
Send the professional clearance letter once the prospective client has agreed in principle to move and before you accept the engagement or start work. ICAEW expects it when you are asked to replace another accountant, when you tender for work held by another accountant and when you take on work that is additional or complementary to theirs. ACCA’s code requires communication for recurring work except where the client has not had an accountant before. Both bodies apply this whether or not the existing adviser is professionally qualified.
In a new client checklist, the professional clearance letter usually sits alongside AML customer due diligence and the engagement letter. Our client onboarding checklist for UK accounting firms shows where it fits in the sequence.
The process, step by step
- Explain the duty to the client. Tell the prospective client you must contact their existing accountant and ask for written authority to do so.
- Get the client to tell the existing accountant. ICAEW asks you to have the client confirm the change and authorise the existing accountant, preferably in writing, to cooperate with you.
- Send the professional clearance letter. Ask for any issue or circumstance that might influence your decision, and list the handover information you need.
- Diary a chase. If there is no reply, chase by email and telephone.
- Send a tracked final letter. State that you intend to accept unless you hear within a specified, reasonable period.
- Decide and record. Consider the reply (or the silence) with your own client acceptance and AML work, then file the correspondence.
What to ask for: a handover information checklist
ICAEW notes that combining the professional enquiry with a request for records and information is common practice, as long as you satisfy yourself it is proper to act before starting. Tailor the list in your professional clearance letter to the client type.
| Item | Sole trader or landlord | Limited company |
|---|---|---|
| Last filed accounts and working papers or trial balance | Yes | Yes |
| Last two Self Assessment returns and computations | Yes | For directors, if you will act for them |
| Corporation Tax computations and CT600s | No | Yes |
| Capital allowances pool balances and losses brought forward | Yes | Yes |
| VAT registration details, scheme and last return | If registered | If registered |
| Payroll: PAYE reference, last full payment submission, pension scheme details | If an employer | If an employer |
| MTD for Income Tax status and software used | If within scope | No |
| Open HMRC enquiries, penalties, appeals or time to pay arrangements | Yes | Yes |
| Companies House: next accounts and confirmation statement dates, ID verification status of directors and PSCs | No | Yes |
| Statutory registers and minute book, if held by the outgoing firm | No | Yes |
Do not expect to be able to rely on the outgoing firm’s AML file. You must complete your own customer due diligence under regulation 28 of the Money Laundering Regulations 2017. Our guide to AML requirements for accountants sets out the evidence by client type, and our AML checks service covers the evidence collection side.
Professional clearance letter template
This is original wording for a professional clearance letter, written as a professional enquiry combined with a handover request. Adapt it to your firm and to your professional body’s guidance.
[Your firm letterhead]
[Date]
[Existing accountant name and firm]
[Address or email]Dear [Name],
[Client name], [company number or UTR if known]: professional enquiry
We have been asked by the above client to act as their accountants for [accounts preparation, tax returns, payroll, VAT, company secretarial work] from [date or period]. The client has authorised us to contact you and has, we understand, written to authorise you to reply. A copy of their authority is enclosed.
Before we decide whether to accept this appointment, please tell us of any issue or circumstance that you consider we should know about, professional or otherwise, that might influence that decision. If there is nothing of that kind, we would be grateful if you would say so.
So that we can continue the client’s affairs without interruption, please also send the following, if held:
- The most recent accounts, with the trial balance and working papers
- Tax returns and computations for [periods], with losses and capital allowance pools brought forward
- [VAT, payroll and pension details]
- Details of any open HMRC enquiries, penalties, appeals or payment arrangements
- [Companies House filing dates and statutory registers]
We aim to complete our acceptance procedures by [date]. If any fees remain outstanding to you, please let us know in your reply.
Thank you for your help. Please reply to [named contact, email and phone].
Yours sincerely,
[Name], for and on behalf of [Firm]
A short authority for the client to sign and send to their outgoing accountant:
To [existing accountant]: I/we have appointed [new firm] as accountants for [entity] with effect from [date]. Please reply to any enquiry from them and provide the information and records they request about my/our affairs. Signed [name, capacity, date].
Chasing and timelines
Neither body sets one fixed deadline for a reply to a professional clearance letter, and their wording differs, so follow your own body’s code.
| Stage | ICAEW helpsheet | ACCA Code (section 320) |
|---|---|---|
| No reply to the first letter | Chase, and try other means such as telephone | Take other reasonable steps to obtain information |
| When to send the final letter | After a reasonable time, possibly 14 to 30 days depending on circumstances | If the existing accountant fails to reply or replies unsatisfactorily |
| Form of the final letter | Tracked delivery, such as recorded post or an email read receipt | Generally by recorded delivery |
| Period stated in the final letter | Specific and reasonable; under two weeks is unlikely to be reasonable | A stated period, “say seven days” |
| If still no reply | You may assume there is no adverse comment, but must still take other reasonable steps | You will assume there are no matters you should be aware of |
Handling non-response, refusal and unpaid fees
If the previous accountant does not respond. Follow the chase sequence above for the professional clearance letter and keep evidence of each attempt. ICAEW says that if you cannot reach the existing accountant at all you should still take other steps, such as checking their professional body’s register, sending a recorded letter to their last address and asking the client about any regulatory or legal matters.
If the client refuses consent. ICAEW asks you to find out why, record the answer and weigh it in your decision. ACCA’s code says that where the client refuses the existing accountant permission to discuss their affairs, you should tell the client you are not prepared to accept the appointment.
If fees are outstanding. ICAEW is clear that unpaid fees do not justify ignoring a professional enquiry. The outgoing accountant may raise the fees in the reply and may in some cases exercise a lien over certain records, but must deal promptly with reasonable requests for records and information the client needs.
What not to ask. ICAEW’s helpsheet says you must not specifically ask whether the existing accountant has reported money laundering suspicions. The existing accountant would not be able to answer such a question in any case. Your own reporting duties apply to prospective clients as well as existing ones.
Who does what when you use an assistant
| Task | Practice | Admin support |
|---|---|---|
| Decide whether to accept the client | Yes | No |
| Obtain and file the client’s signed authority | Approves | Prepares and chases |
| Send the enquiry and handover request from your template | Signs off | Drafts and sends |
| Chase replies and log dates | Reviews | Yes |
| Read the reply and judge any ethical issue | Yes | No |
| Load handover data into your systems | Reviews | Yes |
Virtual Service Assists prepares, sends and chases each professional clearance letter from your template as part of our client onboarding service. Your practice keeps the acceptance decision.
FAQs
What is a professional clearance letter?
It is a letter from an incoming accountant to the existing accountant, sent with the client’s consent, asking for any information that might affect the decision to accept the appointment. ICAEW calls it a professional enquiry, because the existing accountant cannot give or withhold permission to act. It is often combined with a request for handover records and tax information.
Is a professional clearance letter a legal requirement?
It is a professional requirement under section 320 of the ICAEW and ACCA codes of ethics. We are not aware of a statutory duty to send one. HMRC’s standard for agents separately expects agents to pass relevant documents and information to a former client’s new adviser where entitled. Unregulated advisers are still contacted, because the codes apply whether or not they are qualified.
How long should I wait for a reply to a professional clearance letter?
ICAEW suggests chasing and then, after a reasonable period of possibly 14 to 30 days, sending a tracked letter giving a specific deadline of at least two weeks. ACCA’s code refers to a recorded delivery letter stating a period, “say seven days”. After that you may assume there is nothing adverse, while still taking other reasonable steps.
Can the previous accountant refuse to reply because of unpaid fees?
No. ICAEW’s guidance says outstanding fees are not a reason for failing to respond to a professional enquiry. The existing accountant can mention the fees in the reply and may in some cases hold a lien over certain records, but they must still answer the enquiry and deal promptly with reasonable requests for information the client needs.
Should a new client checklist include professional clearance?
Yes. A new accounting client checklist should include written consent to contact the previous adviser, the professional clearance letter itself, the reply or your chase record, and the handover information received. It sits alongside AML customer due diligence, the signed engagement letter and HMRC and Companies House authorisations, all completed before you start chargeable work.
Next step
If the professional clearance letter and handover requests for new clients are slipping between other work, our client onboarding support for accountants takes on the drafting, sending, chasing and filing from your templates. Book a consultation to agree how it would run in your practice.
