Buying an accountancy practice can be a good way to start or grow your practice. Read our tips on getting the regulatory aspects right:

Do I need to re-engage the new clients?

You’ll need to issue new engagement letters to all the new clients. You would be reviewing and re-issuing engagement letters for all your clients every two years anyway, but whenever you get a new client from any source, you will need to issue an engagement letter to them to protect your practice in the event of any dispute. Further guidance can be found in our Engagement letter technical factsheet.

Will I need to do Client Due Diligence/AML checks on the new clients?

Client Due Diligence (CDD) is a series of checks to help you verify your clients’ identities and assess their risk profiles. It’s a big part of AML and KYC directives. 

Whilst the previous accountant may have known the clients for many years, they are new to you, and you may well assess them as higher risk for a variety of reasons. That in turn could affect your Firm-wide AML risk assessment once you have done your CDD on all your new clients.

We understand that if you acquire many clients in one go that it will take time to do the CDD for all of them, but you do should do it before you first carry out any work for any new client. If the first piece of work for a new client will be the self-assessment return next year, then that would be lower priority, but for a new client requiring VAT work imminently, you should get their CDD done before you start the work. All CDD should be done in a timely manner even where it does involve many new clients.

Further guidance can be found on our technical factsheets Client Due Diligence and AML firm-wide risk assessment in the Anti-Money Laundering regulation section of our website.

How do I TUPE across the staff from the practice I’m buying? 

Guidance on TUPE can be found on the ACAS website.

Is my professional indemnity insurance affected?

You’ll need to notify your PII provider that the practice turnover will be higher as a result of the acquisition. It may not result in any change to the premium, but any change in circumstances needs to be notified to the provider to ensure continued protection under the policy. 

Generally if it is just a sale of assets and trade or block of fees only, then your insurers will ask to see the seller’s last completed proposal form, policy schedule and claim history. It is usual that the past liability is insured by the seller through a run-off policy, and you should get assurance that the seller has arranged that cover. Assuming the seller arranges run-off cover then most insurers are happy to note the addition to your policy and review your revised fee income and premium at next renewal.

If it is a share capital purchase and you become responsible for the past liability of the practice you’re buying, your insurers will still ask to see their last completed proposal form, policy schedule and claim history. However most insurers will charge you a pro-rata premium based on the fee income of your practice.

Do I need to tell ACCA that I’m buying another practice?

If buying another practice results in a change of name, a change in the partners, or the addition of an office, then you’ll need to complete our Practice Change of Details form. It’s best to let us know even if you think you do not need to complete the form – just email authorisation@accaglobal.com. 

Any other questions?

If you have other questions then you can contact our Technical Advisory team by emailing advisory@accaglobal.com and quoting your membership number.