Review every recurring client at least annually against three tests: does the fee cover the real work, is the client a risk to the firm, and can the firm do the work well. The ICAEW Code of Ethics requires a periodic review of whether to continue recurring engagements, and money laundering law forces an exit where due diligence cannot be completed. When a client goes, document the decision, give notice away from deadlines and meet your duties to the next adviser.

Is a client review actually required?

Yes, in two ways:

  • Ethics. R320.9 of the ICAEW Code of Ethics (2026 edition, applying from 1 July 2026) says that for a recurring client engagement, a professional accountant shall periodically review whether to continue. Paragraph 320.9 A1 explains why: threats can arise after acceptance that would have led the firm to decline had it known, such as improper earnings management.
  • Money laundering. Regulation 28(11) of the Money Laundering Regulations 2017 requires ongoing monitoring of each business relationship, including keeping due diligence information up to date. Regulation 31 says that where a firm cannot apply customer due diligence as required, it must not carry on the relationship, must terminate any existing relationship and must consider whether a disclosure is required. There is a narrow exception in regulation 31(3) for advisers ascertaining a client’s legal position or acting in legal proceedings.

The commercial review and the compliance review are usually best done together, because the clients who cost most to serve are often the ones whose records, answers and payments are hardest to obtain.

How do you measure whether a client is profitable?

Most practice software can produce the raw data. For each client, compare the annual fee with the true cost of serving them:

  • recorded time at cost rates, not charge out rates, including time on queries, chasing records and HMRC correspondence;
  • work that falls outside the agreed scope and was never billed (see scope creep);
  • write offs, credit notes and the time spent collecting overdue fees;
  • timing: work that always arrives in the final week before a deadline costs more because it displaces other work.

A client who looks profitable on fees alone can be loss making once chasing and unbilled extras are counted. Equally, a small fee can be worthwhile if the work is quick and the client pays on time.

Which risk factors should count?

The Code lists the integrity issues that make a client questionable. Paragraph 320.3 A1 gives involvement in illegal activities, dishonesty, questionable financial reporting practices or other unethical behaviour. Paragraph 320.3 A3 adds competence: a self interest threat arises if the team does not have, or cannot acquire, the skills the work needs. Paragraph 330.4B A2 notes that overdue fees can create a real or perceived self interest threat. In practice, review:

  • the client’s AML risk assessment and whether its due diligence is up to date;
  • refusals to correct errors or disclose income (see when a client refuses to correct a tax error);
  • repeated late or incomplete records;
  • work drifting into areas where the firm lacks expertise, such as overseas structures or specialist reliefs;
  • fee arrears and disputes;
  • conduct towards staff.

How can the results be turned into decisions?

A simple grid keeps the review consistent across partners:

Profitability Risk Usual outcome
Good Low Keep and look after; candidates for extra services
Poor Low Reprice or rescope at the next renewal
Good High Keep only with documented controls, senior review and fresh due diligence
Poor High Plan an exit

Repricing is usually tried first; see raising fees with existing clients. Where due diligence cannot be completed, regulation 31 removes the choice, whatever the profitability.

How do you exit a client properly?

ICAEW’s helpsheet on clients unable to pay fees (reviewed August 2025) says members are free to choose which clients they act for, and that whatever the decision, the firm should document it and the reasons. Its guidance on stepping down applies to any exit:

  • make sure the client is not unduly disadvantaged, for example by resigning just before a deadline; it is preferable to give notice of the intention to resign and not to do so at a critical stage of the client’s affairs;
  • it is generally not appropriate to withhold signature or service purely to improve your bargaining position on fees;
  • where the client is in financial difficulty, consider advising them in writing to consult an insolvency practitioner.

ICAEW also describes a disengagement checklist and a disengagement letter as good practice whenever a firm disengages. The letter should say clearly which work the firm will and will not finish, the date its responsibility ends, and what the client must do next.

What duties continue after you stop acting?

ICAEW’s helpsheet for outgoing accountants (updated October 2025) sets out what happens when the new adviser makes contact:

  • respond promptly to a professional enquiry, usually with the client’s consent; outstanding fees are not a reason to refuse to respond, though you may mention them;
  • under R320.7B, do not disclose whether you have made a suspicious activity report or say anything that could amount to tipping off;
  • under R320.7C, deal promptly with reasonable requests to transfer records, subject to any lien; the purpose of a lien is to prompt settlement from a slow payer, not to extract payment from a client with a genuine dispute;
  • under R320.7D, provide information if its absence might prejudice the client and the client cannot provide it, normally without charge unless there is good reason.

Keep the client’s due diligence records: regulation 40 of the Money Laundering Regulations 2017 requires them to be kept for five years from when the business relationship ends.

What does a client review look like in practice?

Illustration only. A sole practitioner with 120 clients runs her annual review in June.

  • Ninety clients are profitable and low risk; no action beyond normal renewal.
  • Eighteen are underpriced because their businesses have grown. She meets each and issues revised fees with 60 days’ notice.
  • Eight are chronic late payers whose records arrive in January. Five accept a monthly fee by direct debit and an earlier records date; three decline.
  • Three have not provided updated identity evidence after repeated requests, so regulation 31 applies and she ends those relationships and considers whether a report is needed.
  • One has a rental income history that she now believes is incomplete, and has refused to make a disclosure, so she decides to cease acting.

She sends disengagement letters to the seven leaving clients in July, well before the Self Assessment peak, keeps a file note for each decision, and answers each professional enquiry when it arrives.

What mistakes do firms make when letting clients go?

  • Exiting by silence, so the client believes the firm is still responsible for their return.
  • Choosing the timing for the firm’s benefit and leaving a client stranded close to a filing deadline.
  • Holding records hostage in a genuine dispute about the fee.
  • Telling the new adviser or the client why a report was made, which risks tipping off.
  • Reviewing profitability only, so high risk clients who pay well stay on the books.
  • No written record of the reasons, which leaves the firm exposed if the client complains.

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.