ICB has published a new Letter of Engagement for members. This article explains the main changes between the existing template and the 2026 draft, and what members should do in practice.
This article explains the main changes between the existing ICB Letter of Engagement template and the 2026 draft. It is intended as practical guidance for members. It is not legal advice. Members should adapt the template to their own practice, services and client base, and should take legal advice where appropriate.
To access the new letter of engagement, please log on to the member area of the ICB website. The document can be found via Resources/Running a practice/Templates & Downloads.
The 2026 template is the recommended ICB template for future use. Members should use it for all new clients and new engagements going forward.
Members do not necessarily need to replace every existing Letter of Engagement immediately, provided their current terms still accurately reflect the services being delivered and still give appropriate protection to the practice.
That said, members should move existing clients onto the updated wording when the engagement is next reviewed, renewed or materially changed, or where the current Letter no longer properly reflects the services being provided.
In particular, members should prioritise updating existing terms where they now provide:
Why the template has been updated
The 2026 draft is not just a cosmetic refresh. It keeps the same core purpose as the existing template, but updates the wording so that it better reflects how many members now work in practice.
The new draft is better suited to a modern bookkeeping practice because it deals more clearly with:
digital systems and software-supported working
What has changed?
1. The document is clearer and easier to tailor
The 2026 draft is better structured and uses more modern drafting. It separates out the engagement into clearer sections covering scope, services, fees, regulation, AML, data protection, liability and termination.
This should make the template easier for members to adapt and easier for clients to understand.
2. Scope and client responsibilities are stated more clearly
The existing template already says that the member is only responsible for the work detailed in the Letter and that extra work should be covered separately. The 2026 draft keeps that approach, but expresses it more clearly and makes it easier to manage scope creep.
It also expands the wording on the client’s responsibility for the information supplied. The previous template refers generally to information and instructions provided by the client and authorised third parties. The 2026 draft makes clear that this includes information provided manually, electronically, or through bank feeds, software integrations, uploads, scanning tools and third-party applications.
That is important because it reflects the reality of modern bookkeeping systems and makes clear that the client remains responsible for the underlying data.
3. New wording on digital systems, automation and AI
This is one of the most important updates.
The existing template does not include a dedicated clause dealing with digital systems, automation or AI-assisted tools. The 2026 draft introduces specific wording saying that the practice may use digital accounting systems, payroll software, cloud platforms, automated processes, third-party applications, and software features using artificial intelligence or assisted technologies.
It also makes clear that these tools support efficiency and accuracy but do not replace professional judgement.
This gives members clearer protection where they use cloud bookkeeping platforms, integrations, document capture systems, digital workflows and AI-supported functions.
4. Existing bookkeeping, payroll and VAT sections have been modernised
The 2026 draft does not replace the old template’s bookkeeping, payroll and VAT provisions from scratch. Rather, it updates and refines them.
The existing template already includes sections dealing with accounting records, payroll, pensions and VAT. The 2026 draft keeps those service areas but presents them in clearer, more modern language and aligns them more closely with digital filing, software-supported delivery and current working practices.
So the change here is best understood as modernisation and clarification, not the creation of entirely new concepts.
5. New service sections have been added
The 2026 draft adds dedicated sections for services that are not set out as standalone sections in the existing template. In particular, it includes wording for:
This is a major practical improvement because many members now provide services beyond bookkeeping and VAT, and the new draft gives them clearer wording to cover those services.
The addition of a specific MTD for Income Tax section is especially important. The 2026 draft refers to assisting with quarterly updates using compatible software and makes clear that the client remains responsible for complete and accurate digital records and for meeting their statutory obligations.
That service is not covered in the existing template as a standalone area.
6. The fees section is more flexible
This is another important change for members.
The existing template uses a more traditional fees section. It includes hourly rates, sample incidental charges such as photocopying, travel and waiting time, monthly standing order wording, and fixed-fee wording.
The 2026 draft keeps the basic structure of a fees section, but makes it much more flexible.
Specific £ examples removed
The 2026 draft removes the older-style examples of specific charges and instead uses broader wording.
This gives members more flexibility and means they are less likely to need to update the Letter simply because a particular cost or delivery method has changed.
Optional upfront subscription billing
The 2026 draft adds optional wording allowing for recurring fees to be charged monthly or annually in advance where that is the agreed arrangement.
This is useful for members who operate monthly packages, subscription models or reserved-capacity arrangements.
Optional annual fee review wording
The 2026 Letter adds an optional fee review clause intended to give members flexibility to revise fees as part of a general pricing review and not only due to specific triggers such as volume or complexity increases.
This is a practical benefit of the new template. It offers more flexibility and means members may not need to issue a completely new Letter of Engagement every time fees increase, provided the engagement already contains suitable review wording and the revised fee is agreed in writing.
7. AML and identification wording has been updated
The existing template already contains sections dealing with regulation and client identification. The 2026 draft keeps the same broad purpose, but uses more flexible and current wording and better reflects the range of client types and structures members may deal with in practice.
It also reflects the fact that members may use electronic verification tools as part of their compliance processes.
8. Data protection wording has been updated and clarified
The existing template already refers expressly to data protection legislation. The 2026 draft updates this wording by referring to the UK GDPR and the Data Protection Act 2018.
It also explains more clearly that the practice acts as a data processor in respect of personal data processed on the client’s behalf and as a data controller for its own regulatory obligations.
More broadly, the wording is framed in a more modern way and is better suited to the UK’s evolving data protection landscape.
So the change is not that the old template failed to mention legislation, but that the new draft updates the references and explains the practice’s role more clearly.
9. Electronic communications, confidentiality and record retention are presented more clearly
The existing template already includes wording on confidentiality, email communications, disclosure in certain circumstances, and retention of information after the engagement ends.
The 2026 draft keeps those themes, but presents them in a more modern and self-contained way. It is easier to follow and better suited to current electronic working practices.
This is best viewed as a drafting improvement and clarification, rather than a wholly new policy position.
10. Liability, compliance and termination wording is refined
Both templates contain protections dealing with matters outside the scope of the engagement, reliance on client information, legal and regulatory obligations, and the ending of the engagement.
The 2026 draft generally sets these out more clearly and in more modern language.
This should make the document easier for members to use and easier to explain to clients.
What do I need to do?
You do not need to panic and reissue every existing Letter immediately. But you should review your existing engagement terms and update them where:
Priority cases for updating
You should prioritise updating existing clients where you now provide:
As always, if you have any questions about the Letter of Engagement or any other aspect of running your practice, please do get in touch with the ICB team.
