Key takeaways
- A professional clearance letter is a professional enquiry to the existing accountant, asking whether there is any reason you should not accept the appointment.
- ICAEW calls the term clearance a misnomer: the existing accountant cannot give or withhold permission to act, so the decision is the incoming accountant's.
- You need the client's consent, preferably in writing, before you make the enquiry, and the existing accountant needs it before replying.
- If there is no reply after about 14 to 30 days, ICAEW suggests a second letter with proof of delivery giving a deadline; any period under two weeks is unlikely to be reasonable.
- Unpaid fees are not a valid reason for the outgoing accountant to ignore a professional enquiry, although they may hold a lien over records.
- You must not ask the existing accountant whether they have made a suspicious activity report, because answering could amount to tipping off.
- Anti-money laundering customer due diligence is a separate duty that applies when you establish a business relationship, under regulation 27 of the Money Laundering Regulations 2017.
A professional clearance letter is the letter you send to a client’s existing accountant before taking them on, asking whether there is any professional reason you should not act. It is required by section 320 of the ICAEW Code of Ethics, and ACCA’s Code of Ethics and Conduct also has a section 320 on professional appointments. The outgoing accountant should reply promptly and honestly, but they cannot block the move.
What is a professional clearance letter?
It is a professional enquiry, not a request for permission. ICAEW’s incoming accountant helpsheet says the existing accountant “does not have the authority to give or withhold” clearance, so the decision to accept rests with you.
The enquiry applies when you replace another accountant, tender for work another firm holds, or take on extra work alongside an existing adviser.
How do you send one? Step by step
- Explain the process to the client. Tell them you must contact their current accountant.
- Get written consent. Ask the client to authorise the enquiry and to tell the existing accountant they are moving.
- Send the letter. Enclose the client’s authority and ask whether there is anything you should know before accepting.
- Ask for handover information. List the records and figures you need in the same letter or a follow-up.
- Weigh the reply. Assess any threats to the fundamental principles and decline if you cannot reduce them to an acceptable level.
- Complete client acceptance. Finish customer due diligence and issue your engagement letter.
- Get HMRC authorisation. Ask the client to authorise you through your agent services account. HMRC’s client authorisation overview, updated 20 May 2026, says to get authorisation before you act for a client.
What to include in the letter
Keep it short, factual and specific. A typical letter covers:
- your firm’s name, your professional body and the client’s full name and entity number
- the services you have been asked to provide and the start date
- a copy or confirmation of the client’s written authority
- a request to disclose any matters you should consider before accepting
- the handover items you need, such as prior year accounts, tax returns, tax computations, capital allowance pools, loss balances and payroll records
- a request for any filing deadlines in progress and any open HMRC enquiries
Do not ask whether the existing accountant has made a suspicious activity report. Paragraph 320.5A2 of the ICAEW Code means they cannot answer, and the outgoing accountant helpsheet tells them not to answer “either positively or negatively”.
What to expect in the reply
Most replies simply confirm there is nothing you need to know. If there are issues, the existing accountant must give details; ICAEW says “it is not sufficient to state unspecified matters exist”.
| Matter in the reply | Likely effect | What to do |
|---|---|---|
| Fraud, tax evasion or irregularities | Should affect your decision | Discuss with the client or decline |
| Fee dispute or unpaid fees | Might affect your decision | Ask the client and record their answer |
| Client misled the previous adviser | Might affect your decision | Assess integrity and risk |
| Client refused consent to reply | Must be considered | Ask why and document it |
What if the existing accountant does not reply?
Chase first, by phone or email. ICAEW suggests that after about 14 to 30 days without a reply you write again with proof of delivery, such as recorded delivery or a read receipt, saying you will accept unless you hear back within a set period.
ICAEW says any period under two weeks is unlikely to be reasonable. If there is still no reply, you may assume there is no adverse comment, but you must still take other reasonable steps. If you cannot find the accountant, check their professional body’s directory, such as the ICAEW member search, and send a recorded letter to their last known address.
Handover, fees and liens
The outgoing accountant must deal promptly with reasonable requests for records. ICAEW guidance says they normally should not charge for this, unless there is significant work involved.
They can hold a lien over records belonging to the client when fees are unpaid, but outstanding fees do not justify ignoring your enquiry. They must also provide information where its absence would prejudice the client and the client cannot supply it.
Which applies to you?
- If you are taking on a new client from another firm, send a professional enquiry before you accept.
- If the client refuses to let you contact their accountant, ask why and consider declining.
- If the client is a new business with no previous accountant, no letter is needed, but you still carry out due diligence.
- If you are the outgoing accountant, get the client’s permission, reply promptly and send a disengagement letter. See how to sack a client for the end of an engagement.
Clearance is not anti-money laundering checks
The professional enquiry is an ethics requirement; customer due diligence is a legal one. Under regulation 27 of the Money Laundering Regulations 2017, you must apply customer due diligence when you establish a business relationship. ICAEW’s client acceptance helpsheet, reviewed 8 August 2025, has a checklist for both.
Our guides to onboarding a new client and AML supervision for accountants cover the wider checks.
Frequently asked questions
Is a professional clearance letter a legal requirement?
It is an ethical requirement under section 320 of the ICAEW and ACCA codes, rather than a statutory one. A breach of your body’s code can lead to regulatory action.
Can the previous accountant refuse professional clearance?
No. The existing accountant cannot give or withhold permission to act. They can only tell you about matters you should consider, and the decision is yours.
How long should I wait for a reply?
Chase first, then ICAEW suggests a second letter after about 14 to 30 days giving a reasonable deadline. A period under two weeks is unlikely to be reasonable.
Can the outgoing accountant hold back records for unpaid fees?
They may hold a lien over client records for unpaid fees. They must still reply to your enquiry and should not use a lien to pressure a client with a genuine fee dispute.
Do I need the client’s permission to send the letter?
Yes. You usually need the client’s consent, preferably in writing, to make the enquiry, and the existing accountant needs it to reply.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.