A reference or income confirmation sent to a lender can make the accountant liable to that lender if it is wrong and the lender relied on it, even though the lender is not a client. ICAEW guidance (AUDIT 2/01, revised December 2019) is to state only facts you already hold, never to confirm future income or solvency, to disclaim responsibility in writing and to decline when the risk is too high.

Why is a lender’s reference request a liability risk?

Lenders ask accountants because they cannot simply take the borrower’s word for it. Under MCOB 11.6.8R a mortgage lender must obtain evidence of the income declared, must not accept self certification of income, and the source of that evidence must be independent of the customer. MCOB 11.6.9G adds that evidence can still be independent when the customer supplies it, giving tax returns as an example, and that for a self employed customer a lender may consider projections of future income where they form part of a credible business plan.

That pushes lenders towards the accountant. The risk is that a letter written to help a client becomes something the lender relies on. ICAEW’s helpsheet on references on clients’ financial status warns that care must be exercised “to avoid creating a duty of care which could lead to a liability to a lender should things go wrong”. The CIOT and ATT guidance on financial references (as at 1 August 2023) makes the same point: a disclaimer is relevant but not determinative of whether a duty of care exists, so what you say carries as much weight as how you caveat it.

AUDIT 2/01 applies the same thinking to letting agents and to requests about directors of a client company.

What can an accountant safely confirm?

AUDIT 2/01 (ICAEW Technical Release 02/01AAF) lists the information an accountant can usually give for individuals and small borrowers, in paragraph 15:

  • how long the firm has acted for the client;
  • the net income or profits the client declared to HMRC in the latest tax return, where that is not already public, for example in accounts filed at Companies House;
  • based on experience and judgement, a statement that the firm has no reason to suppose the client would enter into a commitment they did not expect to be able to fulfil.

The third item is optional. Paragraph 16 says accountants are not obliged to express a view, and should decline where they have limited experience of the client, have only recently started acting, have doubts, or are being asked to pass on selective information supplied by the client. Paragraph 17 says the reference should state that the firm’s knowledge may not be up to date. Paragraph 25 asks firms to define terms, because “income” could be read as gross or net; gross income means turnover before costs, net income is after costs.

What should never go into a reference or certificate?

Paragraph 5 of AUDIT 2/01 is blunt: no amount of enquiry lets an accountant confirm that a client will have enough income to service a loan, so accountants cannot report in positive terms on future income or future solvency. Paragraph 6 adds that reporting on present solvency is also difficult without a proper engagement on accounts or projections at a stated date.

In practice that rules out:

  • “income certificates” that confirm next year’s profit, or that a forecast is achievable;
  • ticking a lender’s questionnaire that asks whether the client can afford the repayments;
  • confirming net assets or net income in a general sense; the CIOT guidance notes you are unlikely to know the full extent of a client’s outgoings or liabilities;
  • sending draft accounts direct to the bank. ICAEW’s helpsheet advises against it because an inadvertent duty of care may arise, and says drafts should always be labelled as drafts;
  • confirming where the deposit or business funding comes from. Paragraph 24 suggests sending the lender back to the client for information you could only repeat from the client’s own say so.

Where a lender sends its own form, paragraph 23 says accountants amend the wording or add explanation so that it reflects the limited view they can give. Paragraph 26 says that if you are unsure whether you can give the reference or a modified version, you do not give it.

Does a disclaimer actually protect the firm?

A disclaimer helps, but it is not a guarantee. The example reference in Appendix A of AUDIT 2/01 is headed “Without responsibility” and ends by saying the information is given without acceptance of any responsibility and any use is at the lender’s own risk. Under section 2(2) of the Unfair Contract Terms Act 1977, liability for negligence (other than for death or personal injury) can only be excluded or restricted by a contract term or notice so far as it satisfies the requirement of reasonableness. For a notice that is not part of a contract, section 11(3) says the test is whether it is fair and reasonable to allow reliance on it, judged by the circumstances when the liability arose. Section 11(5) puts the burden of showing reasonableness on the person relying on the disclaimer.

So the guidance pairs the disclaimer with restraint: a short factual letter is far easier to defend than a long letter of opinion with a disclaimer at the bottom.

Should you charge for providing a reference?

The two main sources of guidance take slightly different lines:

  • ICAEW. Paragraph 10 of AUDIT 2/01 says accountants do not charge any additional fee for the reference, to avoid the possibility of an implied contract, and disclaim liability in writing.
  • CIOT and ATT. Members should not seek fees from the third party to whom the reference is addressed, but there is no legal reason not to charge the client for the time involved, provided it is agreed upfront and covered in the engagement letter.

Never invoice the lender. If you charge the client, make the engagement letter clear that the work is for the client, not the lender. The CIOT guidance also reminds members to check that their professional indemnity insurance covers reference work, asking the insurer if necessary.

What if the lender wants more than a reference?

A reference under AUDIT 2/01 only works where no work, research or investigation is needed to write it (paragraph 3). If the lender wants specific procedures, paragraph 11 points to an agreed upon procedures engagement under TECH 10/12 AAF. If it wants real assurance, paragraph 12 says a specific engagement is agreed between the accountant, the borrower and the lender, setting out the scope, the type of report and a reasonable limitation of liability, following TECH 4/00 AAF. That is a priced, separately scoped job with its own liability cap, not a favour; see limiting liability in engagement letters.

Two related requests come up often:

  • HMRC documents. Many lenders will accept the tax calculation and tax year overview instead of a letter, which takes the accountant out of the chain of reliance. See SA302 tax calculations for mortgages.
  • High net worth statements. Paragraph 21 of AUDIT 2/01 notes accountants may be asked to sign statements under articles 60H(1) and 60Q(c) of the Regulated Activities Order and refers members to ICAEW’s separate helpsheet. The CIOT guidance says these must be signed by members of ICAEW, ICAS, ICAI, ACCA, CIMA, CIPFA or a comparable overseas body, so CIOT and ATT members without one of those memberships cannot sign them.

What does a safe reference look like in practice?

Illustration only. Priya is a self employed graphic designer whose returns the firm has filed for six years. Her broker emails a lender’s form asking the firm to confirm her “annual income”, her “expected income for the next 12 months” and whether “the applicant can comfortably afford repayments of £1,100 a month”.

  1. The firm gets Priya’s written consent to respond. ICAEW’s helpsheet says consent should be obtained before replying, because of the duty of confidentiality in section 114 of the ICAEW Code of Ethics.
  2. It does not complete the form. Instead it writes a letter on the Appendix A model: how long it has acted, her net profit as declared to HMRC for the last two tax years with “net profit” defined, and that its knowledge may not be up to date and no specific work was done.
  3. It declines the forecast and affordability questions, stating that it can make no assessment of continuing income, future outgoings or ability to meet the commitment.
  4. It keeps the “Without responsibility” heading and closing disclaimer, copies Priya, and files the request and reply.

What are the warning signs of a problem reference?

  • Pressure to use unfiled or draft figures. If the client wants a higher number than the return shows, stop. Under section 2 of the Fraud Act 2006, a person commits fraud by dishonestly making a false representation that they know is, or might be, untrue or misleading, intending a gain or to expose another to a risk of loss.
  • Income you have never seen. A client who asks you to mention income missing from their returns raises tax and money laundering questions as well as reference risk.
  • Large or unusual borrowing. Paragraph 10 of AUDIT 2/01 says declining is legitimate where the risk is unreasonably high, for example because the amounts are too large.
  • Requests about people, not clients. Paragraph 20 says to give a reference on a director or employee only where you have an established professional relationship with them and objective knowledge, and to decline anything outside your firm’s knowledge.

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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.