My accountant is retiring

Two ways a practice closes

ICAEW's guidance for its members describes two routes:¹

If the practice is being sold

ICAEW's guidance on buying and selling fees says:²

• Buying fees is not buying clients. What is bought is a right to an introduction and a recommendation.
• Clients must be told who is taking over. The change cannot be imposed on them, and they should be told and agree before the buyer does any work.
• The client's consent should be obtained before the buyer is given access to their files.
• New engagement letters should be obtained.

So you may get a letter recommending the new firm. Read its engagement letter and fee before you sign, as you would with any new accountant. You can choose to change accountant, subject to any notice period or other terms.

What happens to your records

ICAEW says clients' own documents and files should be returned to them or handed over to the new accountant.¹ Ask for yours to go to you or to the firm you choose, and get a list of what was sent.

You need them. A company must keep its accounting records for 6 years from the end of the last financial year they relate to, or longer in some cases.³ A sole trader must keep business records for at least 5 years after the 31 January deadline for the tax year.⁴

The retiring firm keeps some records of its own. For example, it must keep the client checks it made under the money laundering rules for five years after the relationship ends.¹ For what an outgoing firm must pass on, see What your old accountant must hand over.

The disengagement letter

ICAEW calls it best practice for an accountant to send a disengagement letter when the relationship ends, including when they retire or sell fees. It formally ends the relationship and sets out when their services stop and any outstanding matters.¹ If you do not get one, ask for it. Check it says:

• the date they stop acting for you;
• which returns and filings they will finish, and which they will not;
• what you owe, if anything;
• where your records are going.

If something goes wrong later

ICAEW requires members who close a firm to keep professional indemnity insurance run-off cover for at least two years, and to take reasonable steps to keep it for a further four.¹ If you find a problem with past work, write to the retired accountant or their firm.

If your accountant cannot continue suddenly

Illness or death can stop a sole practitioner without warning. ICAEW strongly recommends that sole practitioners appoint an alternate: another accountant or firm who can keep the practice going or move clients on. For sole practice auditors and those handling client money, an alternate is a regulatory requirement.⁵ If your accountant works alone, you can ask who their alternate is.

Your options

Go with the firm taking over

This can be the least work if the buyer offers what you need. Ask the questions on Questions to ask a new accountant first.

Choose your own firm

You do not have to accept the firm you are introduced to. How changing accountant works sets out the steps.

Do not wait on a deadline

Find out which filings are due in the next few months, and agree in writing who will do each one.