Disengagement letter template for accountants: how to stop acting for a client, with a status report to copy

An accountant can stop acting for a client. ICAEW's helpsheet on resigning says members have the right to choose for whom they act, and so the right to cease to act. What ICAEW asks for is a clean ending: terms of disengagement agreed with the client and, wherever possible, confirmed in a written disengagement letter.

ICAEW's own sample letter is for members only, so the letter below is ours. Members of other bodies should check their own guidance.

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Disengagement letter maker for accountants

Fill in the client, the cut-off date, the work done and the fees. The letter confirms when the practice stops acting and what passes to the client: the five things ICAEW says a disengagement letter should cover.

Which letterThe practice is ending the engagementThe client has given notice Your practice name Client's name Date the practice stops actingOne clear cut-off date. Everything due after it passes to the client or the new accountant. Date of the conversation or the client's email Work completedAccounts for the year ended 31 March 2026, filed 14 September 2026. Quarterly update to 5 July 2026, sent 4 August 2026. Work the practice will still complete before the cut-offNone.Name the work and any date you need records by, or write None. Fees to the cut-off date Of which unpaid Date the client's records will be returned by Name and role of the person signing

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• Write the reason for ceasing to act in a dated file note before the letter goes.
• Attach the status report: one row for each filing due after the cut-off date, with its deadline and the penalty for missing it.
• If a filing deadline is close, tell the client the coming dates and penalties and ways to limit the damage, such as paying tax up front.
• If the client does not sign, get permission to answer the new accountant another way, such as an email.
• After the cut-off date, remove the client in each HMRC online service, taking copies of anything submitted online first.

The rule this rests on: ICAEW "Client disengagement" guidance and "Disengagement letters" helpsheet; GOV.UK "Change or remove your authorisations as a tax agent". A draft to check and adapt, not legal advice.

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What the letter has to do

ICAEW says the purpose is to make clear what the practice is still responsible for during a handover and what falls to the new accountant. It lists five things the letter gives the client:

1. the matters that have been dealt with, inside the engagement and outside it;
2. what remains to be done;
3. the date by which each outstanding matter needs to be completed;
4. what further work, if any, the practice will do;
5. the fees due, for past work and for any work still to come.

ICAEW recommends a clear cut-off point and suggests sending the letter with a status report. It says this matters most for continuing work such as payroll and VAT returns.

Before the letter goes

1. Write down the reason. ICAEW has a checklist helpsheet for this. A dated file note does the same job.
2. List every deadline in the next 90 days. If one is close, ICAEW's resigning helpsheet says to set out the reason for resigning, tell the client the coming filing dates and penalties, and summarise ways to limit the damage, such as paying tax up front.
3. Gather the trail. The same helpsheet lists the evidence that protects the practice if the client complains: engagement terms that set dates for information, reminders before each deadline, chasers after it, and the notice of resignation. A practice that sends the three records request letters on fixed days, under a written records policy, already has it.
4. Draft the status report from the deadline list.
5. Decide the cut-off date and what, if anything, the practice will finish before it.

The letter

Dear [client],

We are writing to confirm that [practice] will stop acting as your accountants and tax agents on [Friday 30 October 2026]. [We explained our reasons when we spoke on 8 October / This follows your email of 8 October.]

Work we have completed: [Accounts for the year ended 31 March 2026, filed 14 September 2026. Quarterly update to 5 July 2026, sent 4 August 2026.]

Work we will complete before that date: [None / The quarterly update for the period to 5 October 2026, provided we receive your records by 16 October 2026.]

Work we will not be doing: the attached status report lists each filing that falls due after 30 October 2026, with its deadline and the penalty for missing it. From that date these are your responsibility or your new accountant's.

Fees: our fees to 30 October 2026 are [£ ], of which [£ ] is unpaid. [Invoice attached.]

Your records: we will return the records that belong to you [on request / by 13 November 2026]. We will reply to your new accountant's enquiry once we have your permission to do so. Please give it by signing below.

HMRC: after 30 October 2026 we will remove ourselves as your agent with HMRC and will no longer receive post or messages about your tax affairs.

Please sign and return a copy to confirm receipt.

The status report

These are example rows; keep the ones that apply to the client. The figures in the last column come from our Self Assessment penalty calculator and Companies House penalty calculator guides.

If the client does not sign

ICAEW says that even if the client fails or refuses to sign, the fact that the letter was sent should prove of value in any later disagreement. If the signature was also going to be the client's permission to answer the next accountant, get that permission another way, such as an email.

After the cut-off date

1. Remove the client at HMRC. GOV.UK says an agent removes a client separately for each online service, and from both the agent services account and HMRC online services for agents. Once removed, the practice has no access to that client's data, so GOV.UK says to take copies of anything submitted online first. For PAYE and Self Assessment an agent can also tell HMRC by calling the Agent Dedicated Line.
2. Answer the professional enquiry. With the client's consent, reply promptly. ICAEW says unpaid fees are not a reason for failing to respond, though the reply may mention them. Never say whether a suspicious activity report was made. Our professional clearance letter guide shows the letter from the other side.
3. Hand over records. The code requires a prompt answer to any reasonable request to transfer records. A lien for unpaid fees is possible in some cases, but ICAEW's guidance says no lien can be asserted over a company's accounting records as defined in section 386 of the Companies Act 2006.
4. Start the retention clock. Regulation 40 of the Money Laundering Regulations 2017 requires due diligence records to be kept for five years from the end of the relationship. For a client who leaves on 30 October 2026 that runs to the end of October 2031. Our guide on how long to keep client records has the full schedule.

Overlyft can set up an AI assistant that keeps the log of each records request and reply and the list of each client's filing dates, which are what the status report is built from. The decision to stop acting, tax advice and sign-off stay with the accountant.

This is general information, not professional advice.