An accountant has a conflict of interest when acting for two or more clients whose interests in the same matter conflict, or when the accountant’s own interests conflict with a client’s. Section 310 of the ICAEW Code requires you to look for conflicts before accepting work, manage them with measures such as separate teams and information barriers, obtain informed consent where needed, and decline or stop acting when the conflict cannot be managed.

This page covers the professional ethics rules for accountants in practice. The separate duties of company directors are explained in directors’ conflicts of interest.

What counts as a conflict of interest for an accountant?

Paragraph 310.2 of the ICAEW Code says a conflict creates a threat to objectivity, and possibly to the other fundamental principles, in two situations: when you provide a service on a particular matter to two or more clients whose interests in that matter conflict, and when your own interests in a matter conflict with those of the client you are advising. The basic rule in R310.4 is that you must not allow a conflict to compromise your professional or business judgement.

The Code’s examples (310.4 A1) include situations that small practices meet regularly:

  • acting for two clients in a legal dispute with each other, such as a divorce or the dissolution of a partnership;
  • acting for both the seller and the buyer in the same transaction;
  • valuing assets for two parties in an adversarial position over those assets;
  • advising a client to invest in a business in which, for example, your spouse has a financial interest;
  • advising a client to buy a product or service while having a royalty or commission arrangement with a possible seller.

The Chartered Institute of Taxation’s Professional Rules and Practice Guidelines add tax examples: both employer and employee, and both settlor and beneficiary.

What checks are needed before accepting a client or engagement?

R310.5 requires reasonable steps, before accepting a new client, engagement or business relationship, to identify circumstances that might create a conflict. Those steps must cover the nature of the interests and relationships between the parties, and the service and what it means for the parties involved. How elaborate the process needs to be depends on the nature of the services, the size of the firm, the size and nature of the client base and the firm’s structure (310.5 A2).

For most small firms, this means a conflict search across the client database at the same point as customer due diligence: names of the client, connected individuals, counterparties and any business being bought or sold. The duty does not stop at acceptance. R310.6 requires you to stay alert to changes during the engagement, which the Code notes is particularly relevant where work might become adversarial even though the parties were not in dispute at the start. If your firm belongs to a network, R310.7 extends the check to interests and relationships of network firms.

How do information barriers and other safeguards work?

The more direct the link between your service and the matter on which the parties’ interests conflict, the more likely the threat is unacceptable (310.8 A1). Measures that help prevent confidential information passing between teams acting for conflicting clients include (310.8 A2):

  • separate practice areas acting as a barrier between specialist functions;
  • policies and procedures restricting access to client files;
  • confidentiality agreements signed by staff and partners;
  • physical and electronic separation of confidential information;
  • specific training and communication.

Safeguards suggested in 310.8 A3 are separate teams with clear confidentiality policies, and review of key judgements by an appropriate reviewer not involved in the service or affected by the conflict. The CIOT guidelines are blunt about the limits: if separate teams and barriers cannot be put in place, acting for both parties is only possible where there is enough mutuality of interest that neither objects to information being shared. A two person office where everyone works on every file will rarely be able to run a credible barrier.

When do you need the client’s consent?

R310.9 requires professional judgement on whether the conflict is such that specific disclosure and explicit consent are needed. The Code describes three forms (310.9 A2):

  • General disclosure, for example in standard terms in the engagement letter, that you act for other clients in the same sector, allowing general consent.
  • Specific disclosure of the particular conflict in enough detail for the client to make an informed decision and give explicit consent, including the planned safeguards and the risks.
  • Implied consent from a client’s conduct, where you have sufficient evidence that the client knew the circumstances from the start and did not object.

It is generally necessary to tell affected clients the nature of the conflict and how threats were addressed, and to obtain their consent where safeguards are being relied on (310.9 A3). If disclosure or consent is not in writing, the Code encourages you to record the circumstances, the safeguards and the consent obtained (310.9 A4). The CIOT guidelines go further for acting on both sides of a transaction, expecting both clients to agree in writing.

What if asking for consent would itself breach confidentiality?

Sometimes you cannot explain the conflict to one client without revealing another client’s affairs, for example a forensic investigation for one client where you hold confidential information from work for another client who might be involved (310.12 A1). In that case R310.12 allows the firm to accept or continue only if all three conditions are met:

  1. the firm is not acting as advocate for one client against another in the same matter;
  2. specific measures prevent disclosure of confidential information between the two teams; and
  3. a reasonable and informed third party would likely conclude it is appropriate to act, because restricting the firm would produce a disproportionate adverse outcome for the clients or others.

R310.13 then requires you to document the circumstances and your role, the specific measures in place, and why acting is appropriate. Throughout, R310.11 requires you to keep the duty of confidentiality in mind, including when discussing the problem within the firm or seeking advice.

When should you decline or stop acting?

If explicit consent is needed and the client refuses it, R310.10 leaves two choices: end or decline the services that would cause the conflict, or end the relevant relationships or dispose of the interests causing it. The CIOT guidelines set out three options when asked to act for more than one party: act for one client only (generally the one who first sought advice, telling the other so there is no suggestion of misusing information), act for both if the conditions above are met, or act for neither where acting for either would be problematic, for example because you hold confidential information about both. If you must disengage, the ICAEW Code requires you to do so as quickly as practicable having regard to the client’s interests (R310.14).

How would this work in a typical case?

Illustration only. Two partners in a trading partnership have used the same accountant for ten years. They decide to split up and each asks the accountant to work out what they are owed on their capital and current accounts.

  • Preparing the final partnership accounts and returns for the partnership itself is a shared interest, and can continue with both partners’ written agreement on the scope.
  • Advising either partner on how to argue for a bigger share puts the firm in an advocacy role against another client on the same matter. An information barrier does not cure this and the accountant should decline that part of the work, suggesting each partner takes separate advice.
  • The accountant records the conflict, the decision and each partner’s agreement, and keeps the position under review if the split becomes contentious. The tax side of the split is covered in partners joining and leaving.

What are the most common mistakes?

  • Running conflict checks only on the client’s name and missing the counterparty, spouse or target business.
  • Relying on a general clause in the engagement letter when the conflict is specific and serious enough to need explicit consent.
  • Claiming an information barrier exists when the same staff and systems serve both clients.
  • Forgetting your own interests: commission arrangements, investments and family connections are conflicts too. PCRT requires a member to disclose to the client any commission or other advantage from a third party relating to the matter being advised on.
  • Failing to revisit the position when a cooperative engagement turns into a dispute.

The underlying method is the same threats and safeguards framework used for every ethical issue.

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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.