Professional Clearance Letters Explained

1. What Professional Clearance Is

A professional clearance letter (also called a "letter of enquiry" or "handover letter") is a formal communication sent by an incoming accountant to the outgoing firm before accepting a new client. It confirms that the outgoing firm has no professional reason the new firm should not accept the engagement, and requests the information needed for a clean handover: prior-year working papers, tax computations, outstanding filings, and software access.

2. Why It's Required

Professional clearance is a regulatory requirement under every chartered body's ethical code. ICAEW, ACCA, CIMA, and ICAS all require members to request clearance before accepting an engagement from a client previously served by another professional accountant. The equivalent rule appears in the AAT's Code of Professional Ethics.

The rule exists to protect three parties: the client (who should not unknowingly walk into an engagement with unresolved problems), the outgoing firm (who has a chance to flag ethical concerns), and the incoming firm (who should not inadvertently step into a dispute or regulatory issue). It is a courtesy between firms, not a veto.

3. What the Letter Contains

A typical clearance letter includes:

• Confirmation of the client's instruction. A copy of your signed authority for the new firm to approach the old one. Without this, the old firm has no authority to share information.
• Request for professional clearance. The formal question: "Are there any professional reasons we should not accept this engagement?"
• Request for handover information. A list of documents and information required to take over.
• Deadline for response. Usually 14 working days, though firms often respond faster.

4. What Your Old Firm Must Disclose

On receipt of clearance enquiry with your signed authority, the outgoing firm must respond. Their response typically confirms:

• Whether there are any professional reasons the new firm should not accept (e.g. unresolved money-laundering concerns, pending regulatory investigations).
• The status of all statutory filings: accounts, CT600, VAT returns, payroll submissions, confirmation statements.
• Any outstanding matters with HMRC: open enquiries, disputes, unpaid liabilities.
• The last period closed and the reporting basis used.
• A copy of the latest accounts and tax computations.
• Working papers sufficient for the incoming firm to continue from where the outgoing one left off.

The outgoing firm's own internal working papers are their intellectual property and need not be handed over in full, but the information necessary for continuity must be.

5. Typical Timeline

• Day 0: you sign an engagement letter with the new firm and an authority for them to approach your old accountant.
• Day 1: new firm sends clearance letter to old firm.
• Day 2-7: old firm responds in most cases. Responsive firms often reply within 48 hours.
• Day 7-14: handover of working papers, software access, HMRC agent re-authorisation. Most of this happens in parallel.
• Day 14-21: new firm active across all services. Old firm agent codes removed.

6. Delays and Refusals

Most clearance transfers are smooth. Where they are not, the issue is usually one of three:

• Slow response. The old firm is busy or the case is being passed between staff. A follow-up after 14 days is standard. If no response after 28 days, the new firm can usually proceed regardless and escalate the old firm to their regulatory body.
• Outstanding fees. The old firm may withhold records pending settlement. See section 7.
• Genuine professional concerns. Rare, but an old firm may flag ongoing HMRC disputes, unreported income, or anti-money-laundering concerns. In these cases, the new firm assesses whether to proceed.

7. Fees Outstanding: Liens on Records

An outgoing accountant has a limited right of "lien": they can retain certain documents until legitimately outstanding fees are paid. The lien does not extend to:

• The client's own records (receipts, invoices, bank statements). These always belong to the client.
• Documents required for statutory filings that would otherwise be late.
• HMRC agent authorisations. These are revoked by the client, not held by the firm.

In practice, most fee disputes are settled quickly once the lien is raised. If the fees genuinely are disputed, the clearance process can still complete; the dispute is handled separately and need not block the transfer.

We manage the clearance process for incoming clients. You provide the authority, we do the chasing. See how we handle the switch for the full sequence, or browse our switching guides for the background.