Professional Clearance
Accountants behaving badly
Some accountants don’t honour professional clearance requests, impeding the next accountant’s ability to see the full picture. Annie Makoff explains
The key points
CLEARANCE
A client’s previous accountant must share information with their new accountant.
SAFEGUARD
Clearance information is crucial for ensuring there are no reasons not to take the client on.
ACCOUNTABLE
Members of professional bodies such as AAT are required to comply with clearance requests.
Professional clearance requests are usually sent to a client’s previous accountant in order for the new accountant to obtain accounting and tax documents and other relevant information relating to the client.
But crucially, it’s a safeguarding mechanism for accountants to find out if there is any particular reason why they should not take on the new client, such as tax evasion, fraud or unsettled accountant fees. Ideally, the outgoing accountant will respond to the request for information promptly and honestly and the new accountant can proceed with the onboarding process.
AAT’s Code of Professional Ethics sets out the principles in managing changes to professional appointments.
The client’s permission needs to be obtained, preferably in writing, to initiate discussion and before sharing any information with an incoming accountant.
An existing or predecessor accountant is bound by confidentiality, subject to legal exceptions. The extent to which the licensed member can, as existing accountant, discuss the affairs of a client with a proposed accountant will depend on the nature of the engagement, whether the client’s permission to do so has been obtained and legal or ethical requirements.
Andy Liston, Director, FMAAT, Glacier Accountancy Ltd
Unregulated accountants don’t have an accountancy body to intercede
Often, the former accountant will tell the client they’ve responded to me in full when they haven’t. The client then doesn’t know if it’s my fault or if it’s an issue with the former accountant, and trying to relay that professionally to the client is difficult.
When I experience issues with professional clearance requests, my first port of call is to see if the client has the information that they can send to me directly instead. In worst-case scenarios where the former accountant is being uncooperative and difficult, you need to report them to their accountancy body, if they are a member of one.
I’m currently experiencing a professional clearance request issue with an unregulated accountant and I’m having to go through HMRC to access necessary information. It’s a long process.
Professional clearance requests are usually sent to a client’s previous accountant in order for the new accountant to obtain accounting and tax documents and other relevant information relating to the client.
But crucially, it’s a safeguarding mechanism for accountants to find out if there is any particular reason why they should not take on the new client, such as tax evasion, fraud or unsettled accountant fees. Ideally, the outgoing accountant will respond to the request for information promptly and honestly and the new accountant can proceed with the onboarding process.
AAT’s Code of Professional Ethics sets out the principles in managing changes to professional appointments.
The client’s permission needs to be obtained, preferably in writing, to initiate discussion and before sharing any information with an incoming accountant.
An existing or predecessor accountant is bound by confidentiality, subject to legal exceptions. The extent to which the licensed member can, as existing accountant, discuss the affairs of a client with a proposed accountant will depend on the nature of the engagement, whether the client’s permission to do so has been obtained and legal or ethical requirements.
In accordance with AAT’s Client Care policy, which includes guidance on client disengagement and professional clearance requests, members must:
• Send a client disengagement letter, regardless if it is their choice or the client’s.
• The letter should outline any outstanding work to be completed prior to conclusion of the engagement and any outstanding work that won’t be undertaken.
• Co-operate and correspond with any new accountant whom their outgoing client chooses to appoint.
However, professional clearance requests are often beset with issues, not due to client misdemeanours but due to some accountancy firms causing unnecessary delays, particularly if the outgoing accountant or firm is not licensed by a professional body such as AAT.
It is a policy across all professional accountancy bodies for members to co-operate with professional clearance requests, but unlicensed accountants have no regulatory body to enforce this.
Sam Mitcham FMAAT, SJCM Accountancy
I’ve had firms with holdclient documents for petty reasons
I’ve experienced several issues with professional clearance requests:
• The previous accountant doesn’t reply at all.
• Refusing to cooperate due to unpaid fees and/or withholding records.
• Responding with limited or incomplete information.
• Dragging their heels, despite a tax deadline coming up.
Sometimes, I’ve had to unpick a previous year’s accounts due to incomplete or incorrect information but this isn’t billable time because it was due to the previous accountant’s error.
Withholding client records in particular has a lot of legalities behind it and there’s a fine line between what belongs to the client and what belongs to the accountant. But often, documents belong to the client and withholding documents for petty reasons due to relationship breakdown is not acceptable.
Accountants should respond to professional clearance requests in a timely manner and returning documents should be done as a matter of urgency.
If you’re experiencing issues with professional clearance requests, I advise:
• Attempting different methods of communication.
• Contacting HMRC or Companies House to obtain information needed directly from them.
• Looking at who the accountant is regulated by and follow their professional guidance and recommended action.
• As a last resort, consider legal action.
