How to draft a letter of engagement for new clients

A Letter of Engagement (LoE) is the most important document in your client onboarding process. It acts as a formal contract that defines the boundaries of your working relationship, preventing "scope creep" and ensuring you get paid on time. Before you start any work, both you and your client must sign this document to ensure mutual legal protection and professional clarity.

Why the Letter of Engagement matters

In the UK, if you are providing professional services—especially in tax, accounting, or consulting—a Letter of Engagement is often a mandatory requirement from professional bodies. Beyond compliance, it serves three main purposes:

• Clarity: It stops clients from assuming you are doing more than you agreed to.
• Protection: It limits your liability if something goes wrong.
• Payment: It sets out exactly how and when you expect to be paid, giving you a clear path to debt recovery if necessary.

What to include in your template

Your template should be structured so that you only need to update a few specific details for each new client. A solid LoE should include the following sections:

Section	Description
Scope of Works	A detailed list of exactly what you will do (e.g., "Preparation of one Self Assessment tax return"). It is often helpful to include what you won't do to avoid confusion.
Responsibilities	Outline what the client must provide. For example, they must provide accurate information by a specific deadline.
Fees and Billing	State your rates, whether you require an upfront deposit, and your payment terms (e.g., "Payment due within 14 days of invoice").
Data Protection	Include a clause on how you will handle their personal data in compliance with UK GDPR.
Termination	How either party can end the agreement and how much notice is required.

Steps to create your draft

1. Use a Professional Template: If you belong to a professional body (like the ATT, CIOT, or AAT), use their model engagement letters. They are regularly updated to reflect current UK law.
2. Keep language simple: Avoid overly complex "legalese." The client needs to understand what they are signing.
3. Include the "Cooling Off" Period: If you are dealing with a consumer (rather than a business) and you haven't met them in person to sign the contract, you must generally include a statutory 14-day right to cancel.
4. Detail the Complaints Process: Briefly explain how a client can raise a concern. This is a key part of appearing professional and trustworthy.

Pro Tip: Once your template is ready, consider using an e-signature platform. It makes it significantly easier for clients to sign quickly on their phones, meaning you can get to work faster.

Review and Refine

Your Letter of Engagement isn't a "set and forget" document. You should review it at least once a year or whenever UK regulations change. Make sure it still reflects how you actually work and that your fee structures remain accurate. If a client's needs change significantly during the year, don't just carry on—send a "Change of Scope" email or a new Letter of Engagement to cover the extra work.