Engagement Letter Template for Accounts & Corporation Tax Return

Annual Accounts and Corporation Tax Return

The following schedule sets out our respective responsibilities for work undertaken in respect of the preparation of the non-audited accounts and company tax return of your entity.

Your Responsibilities

Non-Audited Accounts

You are responsible for making available to us, as and when required, all the entity’s accounting records and all other relevant records and related information, including minutes of management and shareholders’ meetings.
You will also be responsible for:

• Maintaining records of all receipts and payments of cash
• Maintaining records of invoices issued and received
• Reconciling balances with the bank statements
• Preparing details of the following (where applicable) at the period-end: stocks and work in progress, fixed assets; amounts owing to suppliers, amounts owing by customers and accruals and prepayments

Company Tax Return

You are also legally responsible for:

• Ensuring that the CTSA (Corporation Tax Self-Assessment) return (including XBRL tags and iXBRL file) is correct and complete
• Filing or approving any returns by the due date
• Paying tax on time

Failure to do this may lead to penalties and/or interest.

Legal responsibility for approval of the return cannot be delegated to others. The nominated individual agrees to check that the forms that we have prepared for you are complete before they approve them.

To enable us to carry out our work, you agree:

• That all returns are to be made on the basis of full disclosure of all sources of income, charges, allowances and capital transactions.
• To provide full information necessary for dealing with the company’s affairs; we will rely on the information and documents being true, correct and complete and will not audit the information or those documents.
• To authorise us to approach such third parties as may be appropriate for information that we consider necessary to deal with the company’s affairs.
• To provide us with information in sufficient time for the company’s CTSA return to be completed and submitted by the due date/selected date following the end of the tax year. In order that we can do this, we need to receive all relevant information by the agreed date. Where feasible, we may agree to complete your return within a shorter period but may charge an additional fee for so doing.
• To provide information on matters affecting the company’s tax liability for the accounting period in respect of which instalments are due at least four weeks before the due date of each instalment. This information should include details of trading profits and other taxable activities up to the date the information is provided, together with estimates to the end of the accounting period.
• To provide us with information on advances or loans made to directors, shareholders or their associates during an accounting period, and any repayments made or write-offs authorised at the latest within three months of the end of the relevant accounting period.

You will keep us informed of material changes in circumstances that could affect the tax liabilities of the company. If the directors are unsure whether the change is material or not, please let us know so that we can assess its significance.

The work carried out within this engagement will be in respect of the company’s tax affairs. Any work to be carried out for the directors on a personal basis will be set out in a separate letter of engagement or schedule of service.

Where you wish us to deal with HMRC communications you will forward to us all communications received from HMRC. These must be provided in time to enable us to deal with them as may be necessary within the statutory time limits. It is essential that you let us have copies of any correspondence received because HMRC is not obliged to send us copies of all communications issued to you.

Our Responsibilities

Non-Audited Accounts

We will not be carrying out any audit work as part of this assignment and accordingly will not verify the assets and liabilities of the company, nor the items of expenditure and income. To carry out an audit would entail additional work to comply with International Standards on Auditing (UK) so that we could report on the truth and fairness of the financial statements. We would also like to emphasise that we cannot undertake to discover any shortcomings in your systems or irregularities on the part of your employees.

If an audit of the accounts is required, you will need to notify us in writing. Should our work indicate that the entity is not entitled to exemption from an audit of the accounts, we will inform you. If we decide to undertake an audit assignment at your request, a separate engagement letter will be required.

We will attach to the accounts a report in line with the guidance issued by our professional body and the Consultative Committee of Accountancy Bodies (CCAB) which explains what work has been done by us, the professional requirements we have to fulfil and the standard to which the work has been carried out.

You can obtain further information from our professional body’s website on:

• The technical guidance for the work, and
• The related ethical and other professional requirements

To ensure that anyone reading the accounts is aware that we have not carried out an audit, we will refer to this in the report.

The intended users of the report is the addressee (for example the directors).
Once we have issued our report we have no further direct responsibility in relation to the accounts for that financial year.

Company Tax Return

For the purpose of the delivery of the company’s tax return, we will use commercial software to apply XBRL tags to items in the accounts as we consider appropriate for the purposes of submission, for tax purposes, of the accounts in iXBRL via the Government Gateway.

We will, to the extent we consider necessary, manually amend or apply tags where the software has not applied automatic tagging or where we consider any automatic tagging to have been inappropriate.

We will provide you with copies of the iXBRL information, which will show the tagging applied, for your approval.

We will prepare the company’s corporate tax self-assessment (CTSA) return. After obtaining written evidence of the approval of the nominated director, we will submit it to HMRC.

We will prepare the corporation tax computation and supporting schedules required for preparation of the company tax return from accounts, information and explanations provided to us on your behalf.

We will tell you how much tax the company should pay and when. Where instructed by you, we will advise on the interest and penalty implications if corporation tax is paid late. Where taxable losses are involved, we will advise you of the options available and, where appropriate, we will initiate repayment claims.

We will inform you if instalment payments of corporation tax are due for an accounting period and the dates, they are payable. We will calculate the quarterly instalments that should be made on the basis of information supplied by you by the date agreed.

We will advise you as to possible tax return-related claims and elections arising from information supplied by you. Where instructed by you, we will make such claims and elections in the form and manner required by HMRC. Ad hoc queries by way of telephone and email enquiries are not routine compliance and may result in additional fees.