CH4- Engagement letters continued

Question 1

Engagement letter pack

Answer 1

Cover letter
Schedules for different services
Standard terms and conditions of business
Privacy notice
Cancellation notice for consumers

Question 2

To have an engage letter and to review annually is

Answer 2

Strongly recommended

Question 3

Separate engage letters should be issued if providing tax services to both

Answer 3

Individual and their spouse
Individual and their civil partner
Individual and following their death, the personal representatives administering deceased estate
Partnership and individual partners
Company and its shareholder
Company and its directors
Company and its employees
Trustees if a settlement and its beneficiaries

Question 4

Not recommended to issue only one engage letter to cover both spouses/partners

Answer 4

But if do not need to do so, can tailor the wording in the covering letter

Question 5

Group companies

Answer 5

May be easier to send a single engagement letter to parent company of group

• List members of group
• Put respon on client to make them aware of any changes to group

Question 6

Covering letter

Answer 6

Where letter not addressed to individual, addressed to directors, partners, trustees, or members

What to include?
Who they act for, period of engage, scope, AEOI, fees, Liab cap, client agreement

Question 7

Who are we acting for?

Answer 7

Important to be clear who within client organisation has authority to give instructions for work to be undertaken and who is designated signatory

Question 8

Period of engagement

First year of engagement

Answer 8

Should be stated in covering letter

Question 9

Scope of services

Answer 9

Can also include a para setting out other services which are available to clients

Question 10

AEOI (automatic exchange of information) including FATCA (foreign account tax compliance act)

Answer 10

Not all clients/entities will be within scope of FATCA
But those effected must be identified
Engage letter should make it clear that client is responsible for advising a practitioner on any changes to their FATCA status
Practitioner should set out clearly any FATCA work to be undertaken

Member needs to identify if client is in scope of FATCA
Client to tell member if changes to FATCA

Question 11

Fees

Answer 11

Should be mentioned in covering letter briefly
Make terms of payment clear
If a client doesn’t know what they are agreeing to pay, not required by the courts to pay it

Question 12

Limitation of liability

Answer 12

Covering letter

Any limitation to exclude liability is subject to reasonableness test in the Unfair Contract Terms Act 1977

Question 13

Agreement of letter

Answer 13

Client should agree to scope and terms of engage in writing
Minimises risk of subsequent disagreement
Any changes to engage letters which are agreed orally should be subsequently confirmed in writing

Question 14

Schedule of services

Answer 14

Schedule of services attached to covering letter should clearly state what services are to be carried out

Question 15

Fees and VAT

Answer 15

Fees should be stated as being exclusive of VAT

If fees are stated without reference to VAT, will be treated as inclusive of VAT

Question 16

Interest and late fees

Answer 16

Can charge interest on late payment of fees but must meet requirements by Consumer Credit Act
Rate of interest charged should be reasonable and not exceed limits set out by Late Payment of Commercial Debts (Interest) Act 1998

Question 17

Continuous supplies of services and VAT

Answer 17

Can issue a VAT invoice showing the normal invoice details and listing all the payments due over a period of up to 1 year
Tax point is the earlier of the receipt of payment or time when each payment falls due

Question 18

Liability cap

Answer 18

Will only apply to those clients who have agreed to terms and conditions of engage letter

Question 19

Consumers and cancelling a contract

Answer 19

14 days in all cases

Question 20

Privacy notice

Answer 20

A document explaining to data subjects their rights and how their personal data will be used