Changing Accountants: How the Handover Works and What Records You Need

Many business owners stay with an accountant longer than they want to because changing feels more complicated than it really is.

They worry about records being lost, HMRC authorisations having to be rebuilt, an approaching filing deadline, or an awkward conversation with the existing accountant.

In most cases, the process is routine. Where both firms are professionally regulated, there are established procedures governing professional enquiries, disengagement and the transfer of information.

The important thing is to manage the change in the right order and make clear who is responsible for any work or filing deadline that falls during the transition.

This guide explains how the handover normally works, what information the incoming accountant will need, and where delays can arise.

When to move

You can switch at any point in the year. You do not have to wait for your year end.

That said, some timing is cleaner than others:

• Just after your accounts and returns have been filed is the tidiest point. Nothing is half-finished, and responsibility for the completed period is unambiguous.
• Mid-year is entirely normal. Your new accountant picks up from wherever the previous one left off. If you use cloud accounting software, the underlying data is continuous regardless of who is looking after it.
• Immediately before a deadline is the one to avoid. Not because it cannot be done, but because it compresses the handover into a period when there is no slack.

Check your engagement letter before giving notice. Some firms specify a notice period, or terms dealing with work already in progress, recurring services and fees on termination.

The order things happen in

The sequence matters more than people expect, and getting it right keeps the whole thing civil.

1. You tell your current accountant

Do this first, before your new accountant contacts them.

If the enquiry arrives before you have said anything, your existing accountant finds out you are leaving from a competitor. That does not help anybody, and it tends to slow things down.

The message can be short. You do not owe an explanation, though most people give a brief one. Something like: "We've decided to move our accounting to another firm from the end of this month. Could you confirm what notice you need and what will be outstanding at that point?"

Ask two things in that message: what notice period applies, and what work will be incomplete when you leave.

2. You select your new accountant and start onboarding

You sign their engagement letter, which sets out what they will do, what it costs, and what each side is responsible for.

You will also go through an identity check. Accountancy firms are required to verify who their clients are before acting, so expect to provide identification and proof of address. This is not the new firm being difficult — it is a regulatory requirement.

Note that the appointment may be confirmed subject to satisfactory client due diligence and professional enquiry. The incoming accountant decides whether to accept the appointment; that decision is theirs, not the outgoing firm's.

3. Your new accountant makes a professional enquiry

This is the part that sounds formal and worries people unnecessarily.

It is often called "professional clearance", which is a misleading name. Your old accountant is not granting permission. They cannot refuse to let you go, and nothing about the enquiry gives them a veto.

The enquiry does two things:

• Asks whether there is any professional or other reason the new firm should not accept the appointment
• Requests the records and information needed to take over properly

The incoming accountant normally handles this correspondence directly with the outgoing accountant.

4. Your old accountant responds and hands over information

A professionally regulated outgoing accountant will normally be expected to deal appropriately and without unnecessary delay with a valid professional enquiry and handover request — subject to client authority, confidentiality, legal restrictions and any valid right of lien.

Bear in mind that anyone in the UK can describe themselves as an accountant. If your existing accountant is not a member of a professional body, these ethical obligations may not apply to them in the same way.

5. HMRC authorisation is updated

If your new accountant needs to deal with HMRC on your behalf, the appropriate agent authorisations will need to be put in place.

There is no single authorisation process for every tax.

Depending on the service, HMRC currently uses several methods, including:

• online authorisation or a "digital handshake";
• Online Agent Authorisation;
• authorisation through your Business Tax Account; and
• form 64-8 for certain taxes and circumstances.

Corporation Tax, VAT, PAYE and Self Assessment may therefore need to be dealt with separately.

Your new accountant should tell you which authorisations are required and what action you need to take.

Do not give your Government Gateway sign-in details to an accountant. HMRC specifically requires agents to use the formal authorisation routes rather than logging in using a client's credentials.

6. You disengage formally

Your old accountant should issue a disengagement letter confirming they have stopped acting and setting out what they did and did not complete.

For an AAT licensed accountant, a disengagement letter is normally required when the engagement ends.

This is worth having in writing. If a question arises later about who was responsible for a particular filing, the disengagement letter answers it.

Note that this is different from the professional enquiry: the enquiry goes from the new firm to the old one, and disengagement goes from the old firm to you.

What records move with you?

This is one of the areas where it is better not to use a simple "mine or theirs" rule.

Records you originally supplied — such as invoices, bank statements, accounting records and other source documents — will normally remain your property.

For a company, its statutory books and records must also remain available to the company.

You should also expect the information reasonably required to allow the incoming accountant to continue the work, which will commonly include items such as prior accounts and tax returns, relevant tax computations, trial balances and details of material brought-forward balances.

Working papers are different.

Internal schedules, notes, checklists, correspondence and calculations created by the outgoing accountant may belong to the accountant rather than the client. The precise position can depend on the nature of the document and the terms of the engagement.

The engagement letter should explain ownership of records and the firm's retention and lien policy.

What if fees are outstanding?

An unpaid invoice does not give an accountant ownership of your records.

However, in some circumstances an accountant may have a legal right of lien, allowing certain client-owned records to be retained while related fees remain unpaid.

For an AAT licensed accountant, strict conditions apply before a lien can be exercised, and AAT requires the possibility of a lien to have been disclosed in the engagement letter. The member must also obtain legal advice before exercising it.

For that reason, it is sensible to resolve any genuine outstanding fee balance before the handover wherever possible.

What to ask for

Beyond the standard handover, there are a few things worth asking your outgoing accountant for directly. They are easier to get while the relationship is still current.

• Cloud accounting access. If you use Xero, QuickBooks, FreeAgent or another cloud platform, establish who owns or pays for the subscription and make sure you will retain access to your accounting data after the change. If the outgoing accountant controls the subscription, agree how it will be transferred or replaced.
• The last set of trial balance figures, so the new firm can pick up cleanly.
• Fixed asset register and capital allowances position, if you have equipment.
• Any correspondence with HMRC that you do not already hold.
• PAYE and pension scheme details, if they run your payroll.
• A note of anything outstanding or unresolved — an open HMRC enquiry, a late filing, a query awaiting a response.

That last one matters most. Problems discovered during a handover are much easier to deal with than problems discovered six months later.

How long it takes

A straightforward handover may be completed within a few weeks, but there is no standard timetable.

The variables are:

• How quickly the outgoing firm responds to the professional enquiry
• Whether there are outstanding fees
• How many separate HMRC authorisations are needed
• Whether records are in good order
• Whether a filing deadline is imminent

Most of the steps run in parallel rather than in sequence, so the total is usually shorter than the individual timings suggest.

Your own involvement is small: a short message to your current accountant, an engagement letter to sign, an identity check, and completing whatever HMRC authorisation steps apply.

The questions people actually ask

Can my accountant refuse to let me leave?

No. The professional enquiry is an ethical requirement on the incoming firm, not a request for permission. You are free to move.

Will my filings be at risk during the changeover?

They should not be, provided the responsibility for each outstanding item is clear. This is exactly what the disengagement letter is for. If a deadline falls during the transition, agree in writing who is dealing with it.

Do I have to give a reason?

No. Most people give a brief one out of courtesy, but you are not obliged to.

What if my old accountant just does not respond?

Your new accountant will follow it up. If a regulated firm continues to ignore a valid professional enquiry without good reason, that is a matter for their professional body. In practice this is uncommon, and an unpaid invoice explains most silences.

Is it worth switching if I only have a small business?

The size of the business does not change the process. It is the same handful of steps either way.

Before you decide

Changing accountants solves some problems and not others. It is worth being clear about which one you have.

Moving usually helps when: you cannot get a reply, deadlines are being met at the last minute or missed, fees have risen without explanation, you have outgrown what the firm offers, or you have never had a conversation that went beyond compliance.

Moving does not help when: your records are the problem. A new accountant working from the same incomplete bookkeeping will produce the same difficulties. If that is the situation, the conversation to have is about how the books are kept, not about who prepares the accounts.