Terms and Conditions for Limited Companies

WASHINGTON ACCOUNTANCY LIMITED

LETTER OF ENGAGEMENT & TERMS AND CONDITIONS

FOR_______________________________________ LTD

Dear Sir, 

In accordance with the recommendations of our professional body, the Association of Accounting Technicians, this letter confirms the basis on which we provide services to you so as to avoid any misunderstandings of our respective responsibities.

Anti money laundering legislation

All accountants must comply with onerous duties imposed by the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Money Laundering Regulations 2007 (the “Anti Money Laundering Legislation”), which are intended to inhibit the activities of terrorists and other criminals by denying them access to technical expertise.  If we fail to perform these duties, we risk imprisonment.

Before we accept your instructions, we may need to obtain ‘satisfactory evidence’ to confirm your identity. In certain circumstances, we may need to obtain evidence confirming the identities of third parties, the source of any funds or other property, the purpose of any instructions or any other matter. We may also need to obtain such evidence after we have begun to act on your instructions.

We assume that our clients are honest and law abiding. However, if at any time, there appear to be grounds to suspect (even if we do not actually suspect) that your instructions relate to ‘criminal property’, we are obliged to make a report to the Serious Organised Crime Agency (“SOCA”), but we are prohibited from telling you that we have done so.

In such circumstances, we must not act on your instructions without consent from SOCA. If SOCA do not refuse consent within 7 working days we may continue to act. If SOCA issue a refusal within that time, we must not act for a further 31 days from the date of the refusal.

‘Criminal property’ is property in any legal form, whether money, real property, rights or any benefit derived from criminal activity. It does not matter who carried out the criminal activity or how removed the property is from the original crime. Even if you are honest in your dealings, if your property represents a benefit from someone else’s crime, we must still make a report.

Activity is considered ‘criminal’ if it is a crime under UK law, no matter how trivial For example, tax evasion is a criminal offence but an honest mistake is not. We will assume that all discrepancies are mistakes unless there is contrary evidence.

Client monies

We may, from time to time, hold money on your behalf.  Such money will be held in trust in a client bank account, which is segregated from the firm’s funds.

If the total sum of money held on your behalf exceeds £2,000 for a period of more than 2 months, or such sum is likely to be held for more than 2 months, then the money will be placed in an interest-bearing client bank account.  All interest earned on such money will be paid to you.  Subject to any tax legislation, interest will be paid gross.

If there are grounds to suspect (even if we do not actually suspect) that any monies held in a client account is derived directly or indirectly from any criminal activity whatsoever, we may not release such monies until we receive permission to do so from SOCA.

Fees

Our fees are computed on the basis of time spent on your affairs and the responsibility and skill involved by the partners and staff of this firm.  Unless otherwise agreed, our fees will be billed on
approval of the final accounts

Unless specifically agreed, payment of our invoices is due within 30 days from the date of the invoice.

Ownership of records

In the event of non-payment of our fees for services rendered, we may exercise a particular right of lien over the books and records in our possession and withhold the documents until such time as payment of our invoice is received in full.

File destruction

Whilst certain documents may legally belong to you, unless you tell us not to, we intend to destroy correspondence and other papers that we store which are more than seven years old, other than documents which we think may be of continuing significance.  If you require the retention of any document, you must notify us of that fact in writing.

Ethical guidelines

We will observe the ethical guidelines of the Association of Accounting Technicians and accept instructions to act for you on the basis that we will act in accordance with those guidelines.  A copy of these guidelines will be supplied to you on request.

Customer service

We are committed to providing a high standard of customer service.  If you have any ideas as to how our service to you could be improved, or if you are dissatisfied with the service you are receiving, please let us know.  In the event that you have a complaint, we will look into this carefully and promptly and do all we can to explain the position to you or address your concerns.  If you are still not satisfied you may of course make a complaint to the Association of Accounting Technicians.

Third parties

All accounts, statements and reports prepared by us are for your exclusive use within your business or to meet specific statutory responsibilities.  They should not be shown to any other party without our prior consent.

No third party shall acquire any rights pursuant to our agreement to provide professional services.
 

Applicable law

This engagement letter is governed by, and construed in accordance with  English law.  The Courts of England will have exclusive jurisdiction in relation to any claim, dispute or difference concerning this engagement letter and any matter arising from it.  Each party irrevocably waives any right it may have to object to any action being brought in those courts, to claim that the action has been brought in an inappropriate forum, or to claim that those courts do not have jurisdiction.

Disclaimer

We will not be liable for any loss suffered by you or any third party as a result of our compliance with the Anti Money Laundering Legislation or any UK law or at all.

Provision of Services Regulations 2009

We comply with the above regulation by displaying the required details of our Professional indemnity insurance in our office.

Agreement of terms

Once agreed, this letter will remain effective from the date of signature until it is replaced.  Either party may vary or terminate our authority to act on your behalf at any time without penalty.  Notice of termination must be given in writing.

Would you please confirm your agreement to the terms set out in this letter by signing and returning the enclosed copy.  If anything is unclear to you or you require any further information please let me know.

Yours faithfully

We* confirm that we* have read and understood the contents of this letter and agree that it accurately reflects the services that we* have instructed you to provide.

Signed: …………………………………….  Dated: …………………………..

Signed: ……………………………………. *  Dated: ………………………….. *
       For and on behalf of the Board.*
 

ANNUAL ACCOUNTS – LIMITED COMPANIES

Responsibilities of Directors

As director of the company, under the Companies Acts you are responsible for:

• ensuring that the company maintains proper accounting records and for preparing accounts
• determining whether for any reason the exemption is not available in respect of the period.

You will keep records of sales invoices, purchase invoices, receipts and payments, together with any other documents relating to the company’s transactions and activities.  It will also be necessary for you to provide a record of stock at the company’s year end.

A private company is required to file its accounts at Companies House within 9 months of the year end.  The company will be liable to a fine if it fails to do so.  In order to avoid this we will produce statutory accounts, suitable for filing, within the required period, provided all your records are complete and presented to us within five months of the year end, and all subsequent queries are promptly and satisfactorily answered.

We have agreed to act as your agent and to:

 (a) submit the accounts to the Registrar of Companies;
 (b) complete and submit the company’s annual return;
 (c) complete and submit any other forms required by law to be filed at Companies House, provided that you keep us fully informed of any relevant changes or events which are required to be notified to Companies House, within one week of the change or event;  and

Responsibility of the accountants

In relation to the accounts, we will prepare the company’s accounts on the basis of the information that is provided to us.  We will also draft the accounts in accordance with the provisions of the Companies Act, and related Accounting Standards for approval by the Board.

Should our work lead us to conclude that the company is not entitled to exemption from an audit of the accounts, or should we be unable to reach a conclusion on this matter, then we will advise you of this.
 
Continued:

You have instructed us to prepare your financial statements for the year(s) ended …………… and subsequent years.  It was agreed that we should carry out the following accounting and other services:

 (a) write up the accounting records of the company insofar as they are incomplete when presented to us;
 (b) complete the postings to the nominal ledger;  and
 (c) prepare the accounts for approval by yourselves.

You have agreed that you or your staff will:

 (a) keep the records of receipts and balances;
 (b) reconcile the balances monthly with the bank statements;
 (c) post and balance the purchase and sales ledgers;
 (d) extract a detailed list of ledger balances;  and
 (e) prepare details of the annual stocktaking, suitably priced and extended in a form which will enable us to verify the prices readily by reference to suppliers’ invoices.

Or

 (f) provide us with a copy of the valuation produced by your independent stocktakers.

And

(g) prepare details of work-in-progress at the accounting date and make available to us the documents and other information from which the statement is compiled.

You/your management are responsible for the detection of irregularities and fraud.  We would emphasise that we cannot undertake to discover any shortcomings in your systems or any irregularities on the part of your employees or others, although we will advise you of any such circumstances that we encounter in preparing your accounts, unless prohibited from doing so by the Anti Money Laundering Legislation.

We will report, with any variations that we consider may be necessary, that in accordance with your instructions and in order to assist you to fulfil your responsibilities, we have compiled, without carrying out an audit, the accounts from your accounting records and from the information and explanations supplied to us.

We have a professional duty to compile accounts which conform with generally accepted accounting principles.  Furthermore, the accounts of a limited company are required to comply with the Companies Acts and applicable accounting standards.  Where we identify that the accounts do not conform to accepted accounting principles, or if the accounting policies adopted are not immediately apparent, this will be made clear in our report, if it is not clear in the accounts.

 
CORPORATION TAX

We will prepare, in respect of each accounting period of the company, a computation for corporation tax purposes adjusted in accordance with the provisions of the Taxes Acts.  We will also prepare the corporation tax return (form CT600) required under the Corporation Tax Self Assessment regulations.  The corporation tax return, together with the supporting corporation tax  computations, will be sent to you for approval and signature prior to submission to the Inspector of Taxes.

It should be recognised that in law a taxpayer cannot contract out of his fiscal responsibilities and that computations and return forms are prepared by us as agent for the company.  You are legally responsible for making correct returns and for payment of tax on time.  If we ask you for information to complete the tax return and it is not provided within the time-scale requested, so that the preparation and submission of the return are delayed, we accept no responsibility for any penalty or interest that may arise.

We will advise you of the corporation tax payments to which the company will be liable, together with the due date of payment.  You must inform us immediately if the company pays or receives any interest or makes any other payment, or transfers any asset to any shareholder.

Where necessary we will deal with any queries raised by the Inspector of Taxes and negotiate with the Revenue on any question of taxation interest or penalties which may arise.

To enable us to carry out our work you agree:

(a) to make a full disclosure to us of all sources of income, charges, allowances and capital transactions and 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;

(b) to respond quickly and fully to our requests for information and to other communications from us;

(c) to provide us with information in sufficient time for the company’s self-assessment tax return to be completed and submitted by the due date.  In order to do this, we need to receive all relevant information by 31st May each year;  and

(d) to forward to us on receipt copies of all statements of account, letters and other communications received from HM Revenue & Customs to enable us to deal with them as may be necessary within the statutory time limits.

You agree that we can approach such third parties as may be appropriate for information that we consider necessary to deal with your affairs and undertake to authorise such third parties to communicate directly with us.

 
Continued

Please sign and return the enclosed 64-8 to HM Revenue & Customs FORM 64-8 which authorises HM Revenue & Customs to send us copies of formal notices.  In practice, HM Revenue & Customs will treat this as authority to correspond with us, in which case they will not correspond with you except to the extent that they are formally required to do so.  However, this authority does not apply to all HM Revenue & Customs correspondence, and even where it does, HM Revenue & Customs sometimes overlook it.  You should therefore always send us the originals or copies of all communications you receive from HM Revenue & Customs.

P11D benefits for directors*/officers* and higher paid employees*

You have asked us to prepare forms P11D for your approval.  To ensure these forms are correctly prepared we will require details of all benefits, perks or reimbursed expenses received by the directors*/officers*/higher paid employees.*  (Note.  A higher paid employee is someone who received (at the current level) at least £8,500 pa including the taxable value of benefits, perks and reimbursed expenses.)

There are penalties for the late submission of forms P11D.  In order to avoid these, you must ensure that we receive complete and accurate details of all benefits and expenses for the tax year (NB: not accounts year) within 14 days of the end of the tax year. 

  
 
MAINTAINING ACCOUNTING RECORDS

 
 You have agreed that you or your staff will:

 (a) keep the records of receipts, payments and balances;
 (b) reconcile the balances monthly with the bank statements;
 (c) post and balance the purchase and sales ledgers;
 (d) extract a detailed list of ledger balances;
 (e) prepare details of the annual stocktaking and work in progress, suitably priced and extended in a form which will enable us to verify the prices readily by reference to suppliers’ invoices;
 (f) complete the postings to the nominal ledger; 

You/your management are responsible for the detection of irregularities and fraud.  We would emphasise that we cannot undertake to discover any shortcomings in your systems or any irregularities on the part of your employees or others, although we will advise you of any such circumstances that we encounter.