Buying or Selling an Accountancy Practice in the UK - Expert Legal Guidance

Buying or selling an accountancy practice in the UK requires careful planning and a detailed understanding of the legal, financial, and regulatory framework. From client handovers, regulatory notifications (to bodies such as ICAEW or ACCA), and consent requirements where applicable, to the transfer of goodwill and employees, every stage must be handled meticulously to safeguard both parties’ interests.

Our expert solicitors guide buyers and sellers of accountancy firms through every stage of the process, from due diligence and client transfer terms to completion, ensuring your transaction is efficient, compliant, and stress-free.

Accountancy Practice Sale Structures and Legal Options

The first step in buying or selling a UK accountancy practice is to determine how the transaction will be structured.

Transactions are usually governed by a Share Purchase Agreement (SPA) for a share sale or an Asset Purchase Agreement (APA) for an asset sale. Each route carries different tax, regulatory, and liability implications.

General issues:

• Share sale vs. asset sale: Share sales transfer ownership of the company itself, including liabilities; asset sales transfer only defined business assets.
• Goodwill and recurring fee income: Annual Recurring Revenue (ARR) for small to medium-sized practices is often a key valuation consideration.
• Earn-out or deferred payment clauses: Deals frequently involve staged or contingent payments based on future client retention or revenue performance.
• Regulatory restrictions: Professional bodies such as ICAEW or ACCA impose notification and ownership rules that must be observed.
  

Tips for Buyers:

• Decide early whether to pursue an SPA or APA and seek advice on deal structure and tax efficiency.
  
• Confirm whether your professional status allows you to acquire the practice.
  
• Include in terms and discuss suitable restrictive covenants to prevent the seller from soliciting clients or staff post-sale.
  

Tips for Sellers:

• Seek early advice on the most tax-efficient sale structure and eligibility for tax reliefs.
  
• Review partnership or shareholder agreements to understand expected processes, valuation requirements, whose consent is needed and exit provisions.
  
• Be realistic about valuation and open to performance-based earn-outs if suitable.
  

Client Contracts, Retention Agreements, and Clawback Provisions

The value of an accountancy practice often lies primarily in its recurring client base and fee income, so managing client transition is central to maintaining value.

General issues:

• Engagement letters and Data Protection: Client consent may be required before transferring personal data or contractual rights.
  
• Retainer and fixed-fee agreements: Check transferability and renewal terms.
  
• Clawback provisions: Many sale agreements include clauses allowing buyers to recover part of the purchase price if client retention drops below agreed thresholds post-completion, or link such performance to staggered payment structures.
  

Tips for Buyers:

• Review the terms of all key client agreements.
  
• Ensure the sale agreement defines retention thresholds and clawback mechanisms clearly.
  
• Request seller support with post-sale client introductions.
  

Tips for Sellers:

• Prepare a detailed client list, highlighting recurring revenue streams.
  
• Notify clients of the transfer in accordance with regulatory guidance.
  
• Consider how clawback provisions might affect total consideration and negotiate fair thresholds.
  

Partnership, LLP, and Shareholder Agreement Considerations

Where accountancy practices are structured as partnerships, LLPs, or companies with multiple shareholders, internal documents often dictate how a sale can proceed.

General issues:

• Consent and voting rights: Partnership or shareholder approval is often required before any sale.
  
• Capital accounts and profit shares: These will need to be accounted for and likely be reconciled before completion.
  
• Restrictive covenants: Prevent outgoing partners from competing or soliciting clients.
  

Tips for Buyers:

• Review partnership and shareholder agreements during due diligence.
  
• Check for pre-emption or buy-back rights that could restrict the sale.
  
• Consider transitional arrangements with key partners to protect goodwill.
  

Tips for Sellers:

• Resolve outstanding capital or loan balances before marketing the firm.
  
• Review exit procedures and dispute resolution clauses.
  
• Maintain transparent communication with remaining partners to ensure everyone is on the same page.

Regulatory and Professional Compliance

Accountancy practices are subject to strict regulatory oversight and data protection obligations.

General issues:

• Regulatory notifications: ICAEW and ACCA must be informed of ownership changes; some transactions require prior registration or approval.
  
• Where the buyer is not currently registered with ICAEW or ACCA, prior consent or registration is needed before completing the acquisition.
  
• Anti-money laundering (AML): New owners must register under current AML regulations.
  
• Data Protection compliance: Client data must be handled lawfully during transfer.
  

Tips for Buyers:

• Confirm AML registration, indemnity insurance, and regulatory standing.
  
• Review the firm’s compliance framework and file management systems.
  

Tips for Sellers:

• Provide up-to-date regulatory and insurance documentation.
  
• Notify professional bodies of the sale in accordance with their requirements.
  

Confidentiality and Non-Disclosure

Before any financial or client information is exchanged, Non-Disclosure Agreements (NDAs) should be signed by both parties. This protects sensitive data, particularly client lists, fee information, and staff details.

Tips for Buyers:

• Execute an NDA before requesting access to confidential information.
  
• Limit disclosure to key stakeholders until due diligence is complete.
  

Tips for Sellers:

• Require NDAs from all prospective buyers.
  
• Mark confidential documents clearly and store them securely.
  

Tax Considerations in Accountancy Practice Sales

Tax planning plays a decisive role in structuring a sale or acquisition. Even as an accountant, parties should still take other suitable financial and tax advice for the deal and their own position as a result of the transaction.

Tips for Buyers:

• Confirm Transfer of a Going Concern qualification with suitable tax advisors to avoid unnecessary tax costs.
  
• Review stamp duty obligations early in negotiations.
  

Tips for Sellers:

• Plan ahead to benefit from any tax reliefs.
  
• Ensure VAT registration and accounting treatment are clearly addressed in the sale documentation.
  

Note: At The Jonathan Lea Network, we work closely with trusted tax consultants within our network, or we can coordinate with your own accountants and advisers to ensure your transaction is structured tax-efficiently.

Due Diligence, Warranties, and Indemnities

Comprehensive due diligence ensures transparency and reduces the risk of post-completion disputes.

General issues:

• Financial: Includes a review of (amongst other matters) recurring fees, debtor control, and profitability.
  
• Legal: Takes a closer look at ownership of goodwill, premises, and contracts as well as other matters that may need to be addressed in the sale documentation.
  
• Operational: Examine compliance systems, client records, and technology infrastructure.
  

Warranties and indemnities in the sale agreement often cover compliance, financial accuracy, and client continuity — providing both parties with additional protection.

Tips for Buyers:

• Conduct robust legal and financial due diligence before signing.
  
• Seek warranties covering key business and compliance risks.
  
• Verify all licences, contracts, and registrations.
  

Tips for Sellers:

• Organise a clear data transfer for due diligence.
  
• Make full and honest disclosures to limit warranty exposure.
  
• Provide prompt responses to buyer queries to maintain momentum.
  

Employment Law Issues in Accountancy Practice Sales

Staff continuity is essential for client confidence. The Transfer of Undertakings (Protection of Employment) Regulations (TUPE) apply to most practice sales.

General issues:

• Employees automatically transfer to the buyer under TUPE.
  
• Sellers must provide employee liability information to give reasonable notice with specific requirements under TUPE Regulations.
  
• Any redundancies or changes require lawful consultation.
  

Tips for Buyers:

• Review employment contracts and benefits as part of due diligence.
  
• Plan for staff integration and retention incentives.
  
• Communicate early with key employees post-completion.
  

Tips for Sellers:

• Prepare accurate employee data for disclosure.
  
• Clear outstanding holiday or bonus liabilities before completion.
  
• Maintain confidentiality to minimise disruption during negotiations.

Cultural and Transitional Considerations

Client trust and continuity are vital in professional services. Transition planning should be formalised in the sale documentation.

General issues:

• Sellers often agree to stay on under a consultancy arrangement post-completion.
  
• Transition periods typically last 3–12 months or sometimes longer, depending on client size and complexity.
  

Tips for Buyers:

• Negotiate a transition plan to retain clients and staff.
  
• Offer short-term consultancy agreements where needed.
  

Tips for Sellers:

• Support post-sale integration to safeguard your professional reputation.
  

Agree clear terms for your handover period and the need for any formal documentation.

Next Steps: Book a Free Discovery Call

Whether you’re buying an accountancy practice in the UK or selling a UK accountancy firm, early planning and professional advice are key to success. At The Jonathan Lea Network, our accountancy practice sale solicitors manage every stage – from structuring the deal and negotiating the SPA or APA, to ensuring regulatory compliance and completion – so you can move forward confidently

📞 Book your free 20-minute consultation with one of our experienced solicitors today as a starting point or, in some cases, if you would like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT to £350 plus VAT* depending on the complexity of the issues and seniority of the fee earner).

Get in touch using the contact form here or call us now on +44 (0)1444 708 640. You can also visit our team page to meet the lawyers likely to be involved, including Liam, Callum and Andrew.