Letter of engagement template (UK) for consultants, agencies and accountants

A letter of engagement sets out, before work starts, what a professional firm will do for a client, what the client must do, what it costs and the terms both sides accept. This free UK template comes as a Word file (.docx) with no sign-up: a template with [square-bracket] placeholders, a filled-in example for a marketing consultancy, and an addendum of the extra clauses accountants and tax advisers add.

For consultants and agencies the letter records the contract, with the scope of work and your terms of business; accountants and tax advisers also follow their professional bodies' rules, quoted below. Sources were checked on legislation.gov.uk and the publishers' sites on 2 November 2026. This is general information, not legal advice.

Key Takeaways

• A letter of engagement covers the parties, scope, exclusions, client responsibilities, fees, payment terms, liability, termination, complaints and governing law.
• No general UK law requires one, but ACCA tells practitioners "Letters of engagement are mandatory", and the CIOT and ATT "strongly recommend" them.
• Firms covered by the money laundering regulations, such as accountants and tax advisers, must verify a new client's identity before the business relationship starts, with narrow exceptions.
• An assignment of copyright is effective only in writing signed by the assignor, so say in the letter what transfers to the client and when.

What a letter of engagement is, and when you need one

A letter of engagement (or engagement letter) is the written agreement a firm sends a client at the start of an engagement. It can follow a quote or proposal (see the quote template guide): the quote says what the work will cost, and the letter fixes the terms the work is done on.

Whether you must send one depends on your profession. The table is not exhaustive: AAT, ICAS and other bodies set their own rules, so check yours.

One legal duty applies to most service providers (financial services and a few others are excepted by regulation 2). Regulation 8 of the Provision of Services Regulations 2009 lists information you must make available, including your legal name and status, address, register number, VAT number, professional body and general terms. Regulation 11 says when: in good time before the contract is concluded. If you belong to a professional body with a non-judicial dispute resolution scheme, regulation 10 also requires you to tell the client. The letter is a convenient place for all of it.

Download the free template

• Letter of engagement template (.docx). Part A is the template, with 17 numbered sections and an acceptance block. Part B is the same letter filled in for a fictional consultancy. Part C is the accountants' addendum, with the source of each clause.
• Google Docs: upload the Word file to Google Drive, then open it with Google Docs.

Replace every [square-bracket] placeholder, delete the sections that don't apply, and save it as a PDF to send.

An excerpt from Part A:

3. Scope: the work we will do. We will provide the following services. The scope of work [reference and date of your scope of work or proposal, or delete] gives the detail and forms part of this letter.

7. Fees and expenses. [Say whether each fee is fixed, a day or hourly rate, or a monthly retainer, and whether VAT is added.]

Acceptance. I confirm that I have read this letter, [the scope of work] and the terms of business, and agree to them on behalf of [client organisation]. Signed: ____ Name and position: ____ Date: ____

What to put in a letter of engagement

The template's sections, in order:

1. Who the letter is between. Both legal names, company numbers and a named contact on each side.

2. Background. Two or three sentences on what the client wants to achieve.

3. Scope. The services and deliverables. For project work, refer to a separate scope of work and say it forms part of the letter.

4. Out of scope. Anything the client could assume is included, such as ad spend or hosting.

5. Timeline. Dates and milestones, or the length of a retainer.

6. Client responsibilities. The information, access and approvals you need, and by when.

7. Fees and expenses. The basis of each fee (fixed, day rate, hourly or retainer) and whether VAT is added. If your fees are a day rate, work out the day rate before you write this section.

8. Invoicing and payment. When you invoice and when payment is due. Between businesses, the Late Payment of Commercial Debts (Interest) Act 1998 implies statutory interest, at 8% plus the Bank of England base rate unless your contract sets another rate, plus a fixed £40, £70 or £100 by size of debt (section 5A). With no agreed payment date, interest runs after 30 days (section 4).

   Your contract can't simply opt out of this. It can replace statutory interest only with a "substantial remedy" for late payment (sections 8 and 9).

9. Changes to the scope. Extra work is confirmed in writing, with its fee, before you start it.

10. Ownership of the work. The author owns copyright first, unless an employee made the work in the course of their employment (Copyright, Designs and Patents Act 1988, section 11). An assignment "is not effective unless it is in writing signed by or on behalf of the assignor" (section 90(3)). Say what passes to the client, and when.

11. Confidentiality and data protection. Are you a controller or a processor of the client's personal data? The ICO's guide says the key question is who decides the purposes and means of processing. A processor needs a contract with the terms in UK GDPR Article 28(3), so attach them.

12. Liability. Your cap and the losses you exclude. Between businesses in England, Wales and Northern Ireland, you can't limit liability for death or personal injury caused by negligence, and limits on other negligence liability must be reasonable (Unfair Contract Terms Act 1977, section 2). The same test applies to limits on breach of contract where you deal on your written standard terms (section 3); section 11 sets the test.

In Scotland, Part II of the Act applies instead: section 16 covers liability for breach of duty, and section 17 covers standard form contracts. 13. Ending the engagement. Notice periods, and payment for work done. 14. Complaints. Whom to contact and how quickly you respond. 15. Your details. What regulation 8 asks for. 16. Governing law. England and Wales, Scotland or Northern Ireland. 17. Terms of business. Attach any standard terms and say which document wins if they conflict.

An acceptance block for the client's signature comes last.

A filled-in example: a marketing consultancy

Part B of the download fills the template in for a fictional consultancy. Harbourline Marketing Ltd, in Bristol, is engaged by Kestrel Joinery Ltd, a kitchen maker that wants more website enquiries. The figures are illustrative, not market rates.

The example's other choices:

• Out of scope: ad spend, website redesign, photography.
• Payment: discovery invoiced on signing, each month's fee on its first working day, due in 30 days.
• Ownership: copyright in the deliverables assigned once paid; Harbourline keeps its templates.
• Data: Kestrel is the controller, Harbourline its processor under an attached schedule.
• Liability: capped at the fees paid. Notice: 30 days in writing.

Marketing agencies and web agencies can use the same structure for retainers or project builds.

Accountants and tax advisers: what the professional bodies expect

The CIOT and ATT publish proforma letters, terms, schedules of services and a privacy notice, written with AAT and ACCA and dated 3 March 2026 (CIOT: engagement letters); ACCA and ICAEW publish their own. Part C of the download collects the clauses they add:

• Client identification. The Money Laundering Regulations 2017 cover external accountants and tax advisers. They must apply customer due diligence when they establish a business relationship (regulation 27) and verify the customer's identity before it starts, with a narrow exception (regulation 30). The CIOT/ATT guidance says identification "should be satisfied before a practitioner agrees to act for a new client".
• Complaints. The CIOT/ATT guidance says new clients should be told in writing whom to complain to, and of their right to complain to the practitioner's professional body. ACCA's complaints factsheet calls the letter of engagement "a convenient place" to tell clients, and gives wording: a client can take a complaint to ACCA within 6 months of exhausting the firm's procedure.
• Tax conduct. The CIOT/ATT guidance says the letter should state that the practitioner is bound by Professional Conduct in Relation to Taxation (PCRT, effective 1 January 2026). PCRT paragraph 2.11 says a member who limits or changes the scope of services "should make this clear in writing".
• Privacy notice. Not legally required with the letter, says the CIOT/ATT guidance, but it assumes one goes with it, and asks practitioners to decide job by job whether they are controller or processor (payroll may make them a processor).
• Insurance. If you must hold professional indemnity insurance, regulation 8(1)(n) of the Provision of Services Regulations requires you to make the insurer's contact details and territorial cover available before the contract (regulation 11). Separately, the CIOT/ATT guidance (paragraphs 113 and 114) advises keeping the details out of the letter itself, because they change, and never stating your cover limit without the insurer's consent.
• Audits. ISA (UK) 210 paragraph 10 lists what an audit engagement letter must record, including the audit's scope and each side's responsibilities.

Check your own body's current rules before you rely on any template.

Solicitors

Solicitors' client care letters follow the SRA Code of Conduct: written complaints information at the start, including any right to go to the Legal Ombudsman (paragraph 8.3), and the best possible information about cost (paragraph 8.7). This template isn't built for that; use the SRA's client care letters guidance.

Clients who are consumers

If your client is an individual acting outside their business, such as a private tax client, consumer law applies. Agree the engagement away from your premises, or entirely by phone, email or online, and the Consumer Contracts Regulations 2013 let the client cancel without reason within 14 days of the contract being made (regulation 30). You can start inside those 14 days only if they expressly ask (regulation 36). The quote template guide covers the cancellation notice and form.

Under the Consumer Rights Act 2015, section 57, a term can't exclude your liability for failing to perform the service with reasonable care and skill. Late-payment interest under the 1998 Act applies only where both sides act in the course of a business (section 2), so take that sentence out of a consumer's letter.

Common mistakes

• Starting before it's signed. Until it is signed, the terms you rely on may be only what the quote said, or nothing written at all.
• No exclusions. Rule out what a client might reasonably assume is included.
• Silence on ownership. Without a signed written assignment, the legal title to the copyright stays with you, which a client may not expect.
• One letter for years. The CIOT/ATT guidance expects a new schedule of services and fees when a new service starts.
• A cap nobody discussed. The same guidance says a practitioner "must be able to demonstrate" a liability limit is fair and reasonable, and advises discussing it with the client.

Where the letter fits

One order that works is enquiry, quote or proposal, then the letter of engagement. A quote fixes a price; an estimate doesn't, and the quote vs estimate guide explains when each binds.

We make ChatQuote, an assistant for your website that answers enquiries, asks your scoping questions and drafts an itemised quote and a branded proposal from your own prices, for you to review before it goes out, unless you choose automatic sending. It doesn't write engagement letters or carry out identity checks. It gets you from enquiry to an accepted proposal, and the letter starts from there. See how it works as a website chatbot that gives a price.

Frequently asked questions

Is a letter of engagement legally binding?

Once the client agrees to it, it records the terms of your contract. The CIOT/ATT guidance notes on fees call fees "an important part of the contract" and warn that "if a client doesn't know what they are agreeing to pay, they may not be required by the courts to pay it". Get the client's signature or written acceptance before you start.

Is an engagement letter a legal requirement in the UK?

No general law requires one. ACCA's rules require it for practitioners and ISA (UK) 210 for statutory auditors, and the SRA Code requires solicitors to give parts of it in writing (see the table above).

What's the difference between a letter of engagement and a scope of work?

The scope of work describes the work in detail. The letter of engagement sets the terms around it, such as fees, liability and termination, and can refer to the scope of work as part of the contract.

About this guide

Written by the ChatQuote team at CodeLeap Ltd, the company that makes ChatQuote. Sources checked 2 November 2026. More guides to quoting and pricing. Spotted something out of date? Email support@chatquote.app.