Engagement Letter Template for Partnership Accounts and Tax Return

Partnership Accounts & Tax Return

The following schedule sets out our respective responsibilities for work undertaken in respect of the preparation of the non-audited accounts of your entity along with your partnership/LLP tax return.

Non-Audited Accounts

Your Responsibilities

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 partners/members 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.

Our Responsibilities

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 entity, 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 bodies 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.

Once the accounts have been approved, we will file them on your behalf where requested.

Partnership tax return

Your responsibilities

You are legally responsible for:

• ensuring that your partnership/LLP self-assessment tax returns are correct and complete
• filing any returns by the due date

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

Although we will prepare the tax return on your behalf you cannot delegate the legal responsibility to others for the approval of the return. You agree to check that returns prepared for you are complete before you approve them.

To ensure that the return can be completed you agree:

• that all returns will be completed on the basis of full disclosure of all sources of income, charges, allowances and capital transactions
• to provide all information necessary for dealing with your affairs, including details of the split of profit between partners/members
• to authorise us to approach such third parties as may be appropriate for information that we consider necessary to deal with your affairs
• to provide us with information within the agreed time scale

You agree to keep us informed of changes in your circumstances that could affect the partnership/LLP tax return.

You will forward copies of any communication received from HMRC pertinent to your partnership/LLP tax on a timely basis.

You are responsible for employment taxes, pensions (including auto-enrolment) and the assessment of the tax status of your workers, including domestic staff. If you do not understand what you need to consider or action you need to take, please ask.

Our Responsibilities

We will not be carrying out an audit as part of this assignment and accordingly will rely upon the information and explanations provided by you.

We will prepare the partnership/LLP self-assessment tax returns and the annual partnership statements together with any supplementary pages required from the information and explanations that the partnership/LLP provides to us. In particular, we will allocate the split of profits and other gains between the partners/members on the basis provided to us.

We will prepare the income tax and capital gains tax computations based on the partnership/LLP’s business accounts for inclusion in the partnership/LLP tax return.

Where instructed by you, we will advise you as partners/members as to possible partnership/LLP tax return-related claims and elections arising from information supplied by the partnership/LLP in the form and manner required by HMRC.

If instructed, we will provide each partner/member or their agent with details of the partner/member’s allocations from the return to enable partners/members to fill in their self-assessment tax returns. The split of profits and other gains between the partners/members will be allocated on the basis provided to us. We will not provide any other information to individual partners/members unless this is authorised and forms part of a separate engagement.

If any of the individual partners/members require personal tax advice or require us to prepare a personal tax return and/or wish us to make possible tax return-related claims, please let us know as this will be the subject of a separate engagement letter.