Press Release 14 September 2001
Revised Guidance on Engagement Letters
John Whiting, President:
Tel No: 020 7804 4422 Mobile: 07710 027 595
Bianca Marsden or Viv Rees:
Tel No. 020 7235 9381 (0930 – 0500)
The seven leading tax advisory bodies have issued updated guidance notes on engagement letters - the contractual letters that lay out what a client can expect from their tax adviser, together with the rights and obligations of all parties. The new notes for engagement letters have been revised to incorporate a number of new issues and legislation such as IR 35 and the introduction of corporation tax for companies.
John Whiting, President of the Chartered Institute of Taxation, said:
“We all recognise that there have been many changes that needed to be reflected in engagement letters. Having one set of practical guidance notes that everyone can use to establish good working relationships at the outset helps clients and practitioners alike. The new guidance notes make a significant contribution to ensuring that throughout the tax profession there are consistent high standards.”
The document contains example letters which practitioners can adapt for individual clients including sole traders, corporate and partnership clients, with example paragraphs covering key areas including personal service companies (IR35), VAT and payroll. Although the letters are oriented towards the completion of tax return forms, there is a draft letter covering consultancy, which includes enquiry work.
The seven leading tax bodies strongly recommend tax practitioners issue a letter of engagement for tax work to define the terms of the engagement and agree these with the client. A letter of engagement defines the work the adviser will undertake, and provides significant protection to the client. It is likely to be an important document in a dispute such as a claim for professional negligence.
The guidance draws attention to matters practitioners should bear in mind when drafting letters of engagement, such as whether the practitioner is an agent or principal, and what the letters should contain. As a minimum, there should be paragraphs on:
- The nature of the services to be provided;
· The responsibilities of the client including the obligation to provide full information; and
· Quality of service, complaints procedures and fee arrangements.
Practitioners will also need to refer to the practice guidelines drawn up by their professional bodies, investment business legislation, and additional regulations such as data protection.
The guidance note is available on request from Jonathan Crump at The Chartered Institute of Taxation, Tel No: 020 7235 9381 or e-mail < firstname.lastname@example.org >.
NOTE FOR EDITORS:
The guidance note issued by the Chartered Institute of Taxation replaces the note issued in 1997. The seven bodies who worked together to produce the guidance are the Chartered Institute of Taxation, the Institute of Chartered Accountants in England and Wales Tax Faculty, the Institute of Chartered Accountants of Scotland, the Institute of Indirect Taxation, the Association of Chartered Certified Accountants, the Institute of Chartered Accountants in Ireland and the Association of Taxation Technicians.
The Chartered Institute of Taxation (CIOT), the leading professional body in the United Kingdom concerned solely with taxation, was established in 1930 and received its Royal Charter in 1994. The CIOT’s primary purpose is to promote education in and the study of the administration and practice of taxation. Members of the CIOT have the practising title of “Chartered Tax Adviser”.
One of the CIOT’s key aims is to achieve a better, more efficient, tax system for all affected by it - taxpayers, advisers and the authorities. The CIOT will frame its comments and recommendations on tax issues solely in order to achieve its aims: it is entirely apolitical in its work.
Membership of the CIOT is open to individuals from all disciplines who are competent and qualified to advise on taxation matters. Entrance is through its associateship examination, from which members may advance to fellowship by thesis. An increasing number of members hold the CIOT qualification as their main professional qualification.
The CIOT deals with all aspects of direct and indirect taxation. It is the United Kingdom member of the Confédération Fiscale Européenne (CFE), the umbrella body for taxation advisers in Europe. The CFE represents a total of over 150,000 tax advisers throughout the European Union and its neighbouring countries. It plays a full part in the development and operation of tax legislation in the Union and supports the establishment and maintenance of the rights of tax advisers within the Union.
The CIOT is a registered charity.
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