Most fee disputes are settled by giving the client a clear breakdown of the bill, explaining any overrun against the estimate and negotiating. The professional bodies will check that a member followed the ethical rules on fees but will not decide what the fee should have been, so if talking fails the options are mediation, arbitration if both sides agree to it, or a county court claim, where disputed claims of £10,000 or less go to compulsory mediation first.

What do the professional codes require when a fee is challenged?

The ethics codes put the burden on the accountant to be transparent:

  • ICAEW. Paragraph R330.4B.1 of the ICAEW Code of Ethics requires a member to provide a fee breakdown if the client asks for one, with enough detail for the client to understand how the fee was calculated, free of charge. Paragraph R330.4B.2 requires an explanation, and the calculation, where a fee exceeds a previous quote or estimate. ICAEW’s fee information helpsheet suggests a breakdown should normally show the work done, the time spent by different levels of staff, and the reasons for any extra time or expense.
  • ICAS. Section 330 of the ICAS Code of Ethics expects the basis of fees to be explained at the outset and confirmed in writing, ideally in the engagement letter, enough information to be given free of charge if a dispute arises, a full explanation where fees exceed the quote by more than a reasonable amount, and prompt steps to resolve disputes.
  • ACCA. ACCA will not advise on what is a reasonable sum but will consider whether a member complied with its regulations on fees.

Most disputes are prevented at the start, by a clear scope and fee basis in the engagement letter and by warning the client as soon as an overrun becomes likely. See also fixed fees and hourly rates.

Why will the professional body not settle the dispute?

Because the fee is a contractual question. ICAEW’s guidance for clients explains that the relationship is governed by the law of contract and that, if a fee dispute is not resolved any other way, it is the courts that decide whether a fee was properly charged. The bodies say so directly:

  • ICAEW states that it does not have power to resolve fee disputes and that a fee dispute is not in itself a breach of its Code of Ethics.
  • ICAS says it cannot get involved in disputes that relate solely to the level of fee, because it cannot determine whether the fee is reasonable.
  • AAT will not investigate fee disputes, and states that members are entitled to recover unpaid fees, for example through debt collection agencies or the small claims court.
  • CIOT and ATT, and the Taxation Disciplinary Board, do not get involved in fee disputes between members and clients.

A client who complains about a fee may still trigger a conduct review if, for example, no breakdown was given or an overrun was never explained. The firm’s complaints procedure should handle fee complaints like any other.

Is there a fee arbitration scheme?

For ACCA members, yes. The ACCA Arbitration Scheme is run independently by the Chartered Institute of Arbitrators for ACCA members and firms in dispute with clients. Its rules provide that:

  • all parties must agree in writing to arbitration, by signing the application form, and each pays a registration fee;
  • it does not apply once legal action has started, unless that action is suspended or discontinued;
  • it is normally documents only: the claimant has 21 days from the arbitrator’s appointment to submit its claim, the respondent 21 days to reply, and the claimant 14 days to comment;
  • the arbitrator gives a reasoned award within 42 days of receiving all the papers, and any payment is due within 21 days;
  • the award is legally binding, with an appeal to the High Court only on a point of law.

ACCA also has a mediation scheme run by the same institute. For ICAEW firms there is no fee arbitration scheme for ordinary fee disputes, but ICAEW will find and appoint an arbitrator, mediator or expert for a dispute. The administration charge is £10,000 plus VAT, on top of the appointee’s own fees, and ICAEW says the service is unlikely to be cost effective where less than £100,000 is in dispute.

What if the client simply does not pay?

For business clients, late payment legislation gives the firm statutory rights unless the contract sets its own interest rate:

  • if no payment date is agreed, payment becomes late 30 days after the client receives the invoice or the service is provided, whichever is later;
  • statutory interest is 8% plus the Bank of England base rate;
  • a fixed sum for recovery costs can be added once per invoice: £40 for debts up to £999.99, £70 from £1,000 to £9,999.99, and £100 for £10,000 or more.

If that fails, the firm can make a court claim. In England and Wales the claim fee depends on the amount, for example £115 for a claim between £1,500.01 and £3,000 and £455 between £5,000.01 and £10,000. If a claim of £10,000 or less is defended, the parties must attend free mediation organised by the court, and a judge can sanction a party who does not take part. Scotland and Northern Ireland have their own processes. Under section 5 of the Limitation Act 1980 a contract claim in England and Wales must be brought within six years of the cause of action arising.

What does the law treat as a reasonable fee?

Where the contract does not fix the price or the way it is to be worked out, the law fills the gap. For business clients in England, Wales and Northern Ireland, section 15 of the Supply of Goods and Services Act 1982 implies a term that the client will pay a reasonable charge, and what is reasonable is a question of fact. For consumer clients, section 51 of the Consumer Rights Act 2015 implies a reasonable price, and section 49 requires the service to be performed with reasonable care and skill. Fee disputes often turn into service complaints for this reason, and a client who alleges poor work may counterclaim, which is a point to raise with the firm’s professional indemnity insurer.

Can the firm keep the client’s papers or deduct fees from a tax refund?

Only within limits. ICAEW’s guidance for clients explains that an accountant may have a lien over papers used for work that is unpaid, but once legal action or arbitration has started the papers should be released, and a lien cannot usually be used to hold a limited company’s statutory books or accounting records. A client who urgently needs papers can offer to pay the disputed sum to a stakeholder such as a solicitor. See an accountant’s lien over client records.

On deducting fees from money held for the client, such as an HMRC repayment, ICAEW’s guidance says this should usually happen only if the amount has been agreed or decided by a court or arbitrator, or the client has agreed in writing a formula for the fee, and the bill was issued more than 30 days earlier without being questioned.

What happens to the VAT on an unpaid fee?

A VAT registered firm will normally have paid output tax on the invoice. VAT Notice 700/18 allows bad debt relief once the debt has been unpaid for six months from the later of the due date and the date of supply, the VAT has been accounted for, and the debt has been written off in a separate bad debt account. Relief must generally be claimed within four years and six months. Where a disputed amount is involved, the notice explains that if the firm agrees to extend the payment date, the six months run from the extended date. See bad debts in the accounts and for tax.

How might a dispute be resolved?

Illustration only. A firm quoted £1,500 plus VAT for a company’s accounts and corporation tax return. The records arrived late and incomplete, and the final bill was £2,400 plus VAT. The director refuses to pay more than £1,500.

  1. The firm sends a free breakdown showing time by staff grade and the extra hours caused by the missing records, and explains why the quote was exceeded. It also accepts that it did not warn the client when the overrun became likely.
  2. It offers to settle at £1,900, recording the reduction as a concession without accepting that the original bill was wrong.
  3. If the client refuses, the firm could propose arbitration if it is an ACCA firm, or issue a county court claim. A claim for £2,400 would carry a court fee of £115 and, if defended, would go to compulsory mediation.
  4. If the debt is written off, the firm can claim VAT bad debt relief once six months have passed from the due date.

What mistakes do firms make?

  • Charging for a fee breakdown, or refusing one.
  • Exceeding a quote without telling the client at the time.
  • Using a lien to pressure a client who has a genuine dispute, or withholding company records.
  • Taking fees from a client’s tax refund without agreement.
  • Issuing a court claim without considering whether the client will allege negligence in response.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.