[Firm name] client disengagement: [client name]
Replace everything in [square brackets].
1. Decision record (internal, not sent)
| Item | Detail |
|---|---|
| Client and entities | [Names] |
| The reason, in one sentence | [Scope creep, unpaid fees, values, risk or fit: one sentence] |
| Fixable? If yes, the fix and review date | [Yes or no; fix; date] |
| Engagement letter notice period and termination terms | [What it says about notice, work in progress, documents and fees] |
| End date | [Date] |
| Jobs we will finish, with deadlines | [Jobs, dates] |
| What is owed (unbilled work and unpaid invoices) | [Amount; bill, write off or ask for before finishing] |
| AML lead consulted (if there is any suspicion) | [Name, date, or "not applicable"] |
| Decided by | [Name, date] |
2. The AML note
If you suspect money laundering or other crime, talk to whoever handles AML reporting before you call the client. ACCA’s guidance warns that ceasing to act without any plausible explanation might tip off the client that a report has been made. In Australia, firms providing designated services have been AML/CTF reporting entities since 1 July 2026, and AUSTRAC says a suspicious matter report is due within three business days of forming the suspicion (24 hours for terrorism financing). Ending the relationship does not end that duty. The source of truth is AUSTRAC in Australia and your AML supervisor in the UK.
3. The call
Call first, then write the same day. You are telling them, not negotiating. Three lines:
- "We’ve decided we’re not the right firm for you, and I wanted to tell you myself."
- "We’ll finish [jobs] by [date]. After that, we’ll hand everything to whoever you choose."
- "You’ll have a letter from me today with this written down."
If the reason is behaviour, say the relationship is not working; you need not list every incident.
4. Disengagement letter outline
A structure with placeholders, not legal wording. Check the final letter with your professional body or PI insurer before you send it.
| Heading | What the letter says |
|---|---|
| The decision | We will cease to act for [client and entities] from [end date]. |
| What we will finish | [Jobs] by [dates]. Nothing else after [end date]. |
| What we will not do | We will not prepare or lodge [returns, statements] for [periods] or monitor deadlines after [end date]. |
| Deadlines you now own | [Next lodgment and payment dates we know of.] |
| Your records | How and when we will return [documents and data], and how a new adviser can request information from us with your permission. |
| Fees | [Final invoice, or "no further fees".] [Any lien position, only if your engagement letter disclosed one.] |
| Authorities | We will remove ourselves as your agent or representative with [ATO, HMRC, IRS] on [date]. |
| Software and access | [Subscriptions, ledger files, logins] transferred to you or closed by [date]. |
| Contact | Who to contact at the firm until [end date]: [name, email, phone]. |
Sent on [date] by [method you can prove]. Copy filed at [location].
4a. Letter A: we are ending the engagement
Dear [first name],
Further to our call today, I am writing to confirm that [Firm name] will stop acting for [client and entities] from [end date].
Before then we will finish [jobs] by [dates]. We will not prepare or lodge any [returns or statements] for [periods], or monitor any deadlines, after [end date]. The next deadlines we know of are [dates and what is due]; these are now yours or your new adviser’s.
We will return [your documents and data] by [date] and remove ourselves as your agent with [ATO / HMRC / IRS / IRD] on [date]. If your new adviser contacts us, we will answer them once you have given us permission.
[Your final invoice is attached / There are no further fees.] Until [end date], please contact [name] on [email, phone].
[Name], [role]
4b. Letter B: unpaid fees
Check your engagement letter and the records rules in section 5 before you send this. The client’s own documents generally go back whatever is owed.
Dear [first name],
Our invoices [numbers], totalling [amount], have been unpaid since [date], despite our reminders on [dates]. As set out in our engagement letter, we will stop work on your affairs from [date] and cease to act for you from [end date] unless the balance is paid or we agree a payment plan by then.
If we cease to act, we will not prepare or lodge anything further, and the deadlines below will be yours or your new adviser’s: [dates and what is due]. We will return [your documents] by [date] and remove ourselves as your agent on [date].
To settle the balance or agree a plan, contact [name] on [email, phone].
[Name], [role]
4c. Letter C: confirming the client is leaving us
Dear [first name],
Thank you for letting us know that you are moving to [new adviser, if known]. This letter confirms that we will stop acting for [client and entities] from [end date].
[We will finish jobs by dates / We will not start any further work.] The next deadlines we know of are [dates and what is due]; please make sure your new adviser has them.
When your new adviser writes to us, we will reply promptly with your permission and send the handover information they need. We will return [your documents and data] by [date] and remove ourselves as your agent on [date].
Thank you for working with us. [Name], [role]
5. Records and fees: what the bodies say
| Where | What the body says |
|---|---|
| Australia (TPB) | TPB(GS) 07/2011 (updated 30 April 2026): tax practitioners will usually not have a right of general lien. A particular lien may attach only to work you have added value to, such as a draft return. Source documents and ATO correspondence are likely to belong to the client and generally cannot be held. The TPB encourages legal advice first. |
| Australia (APESB) | APES 305: a lien policy should be disclosed in the engagement document. APES 110 section 320: answer a proposed accountant honestly and unambiguously, and only with the client’s permission. |
| UK (ICAEW, ACCA) | ICAEW (updated 29 October 2025): outstanding fees are not a reason for failing to respond to a professional enquiry, and never disclose whether you have made a suspicious activity report. ACCA: reasonable transfer information goes to the new accountant free of charge. |
| US (AICPA, IRS) | AICPA ET 1.400.200: client-provided records may not be withheld on an initial request because fees are unpaid. Circular 230 section 10.28: return records needed for federal tax obligations promptly. State boards differ; California’s says unpaid fees do not justify keeping client records. |
The pattern: the client’s own documents go back promptly, whatever is owed. Your working papers are generally yours. Anything in between needs your engagement letter and a lawyer. Keep your own copy: in Australia, section 30 of the TPB Code Determination requires records of the tax agent services you provided, including to former clients, for at least five years.
6. Handover checklist
- Client’s documents and data returned on [date], by [method].
- Professional enquiry from the new adviser answered, with the client’s written permission.
- Our file copy complete and retained for [period].
- Australia: our contact details removed from the client’s ATO records, then the client removed in Online services for agents; our details removed from the Australian Business Register.
- United States: Form 2848 withdrawn as the instructions describe ("WITHDRAW" across the top of the first page, signed and dated), or withdrawn through Tax Pro Account; client asked to revoke any Form 8821.
- United Kingdom: agent authorisations removed with HMRC, using the route that matches how we were authorised.
- Subscriptions, ledger files and logins transferred or closed.
- Recurring invoices and direct debits cancelled.
- Team told the end date, which jobs are still ours, and who takes the client’s calls.
- Client archived in our practice management system ([Xero Practice Manager, Financial Cents, Pixie or whatever we run]) so nobody schedules next year’s work.
This template is a starting point, not legal advice. Your obligations depend on where you practise, your professional body and your clients; take advice on anything you are unsure of.