Solicitors Accounts
Money Rules
2.1: Client Money: will not include reimbursement for disbursements already
paid by the firm.
o Money should be paid promptly into the correct account
3: Client Bank Account + Business Bank Account (Client money is kept
separate)
4.3: Firms must never withdraw more money for a Client than held in the
Client bank account
3.3: Client account cannot be used to provide banking facilities
8: All dealings with Client money must be recorded
7.1: Must account to Clients for a fair sum of interest on any Client Money
held for them unless an alternative written arrangement made with sufficient
information to give informed consent.
o Open separate deposit account, recording interest on client ledger account
o Paying interest from the business bank account
o The Solicitors Act 1974 allows solicitors to keep the interest earned on
client money placed on general deposit.
Property transactions – acting as stakeholder: client money held for buyer
and seller jointly
o Credit seller’s ledger account with note that it is held jointly
o Make an inter-client transfer on the day of sale completion
Joint account – money is client money, regulated by
o Regular statement every 5 weeks
o Central record of costs notifications
Solicitors may operate a client’s bank account where power of attorney and
must
o Produce statements every 5 weeks
o Keep a central record of bills/costs
TPMA accounts – managed by a third party, will not be classed as client money
o FCA regulated
o Potential cost savings and enhanced security
VAT
Where registered for VAT must charge customers on taxable supply, goods
and services made in the furtherance of business – rate of 20%
Do not charge on disbursements paid on behalf of Clients (where for the client’s
use and not the solicitor).
o Invoice addressed to Client – Agency Basis
Firm uses Client money where possible, DR the Client ledger
Give the Client the original suppliers’ invoice
o Invoice addressed to the Firm – Principal basis
Recorded on the cash account and VAT on HRMC account
Firm uses own money to pay, debiting the Client ledger business
side
Must give the client a VAT invoice
Compliance
Money Rules
2.1: Client Money: will not include reimbursement for disbursements already
paid by the firm.
o Money should be paid promptly into the correct account
3: Client Bank Account + Business Bank Account (Client money is kept
separate)
4.3: Firms must never withdraw more money for a Client than held in the
Client bank account
3.3: Client account cannot be used to provide banking facilities
8: All dealings with Client money must be recorded
7.1: Must account to Clients for a fair sum of interest on any Client Money
held for them unless an alternative written arrangement made with sufficient
information to give informed consent.
o Open separate deposit account, recording interest on client ledger account
o Paying interest from the business bank account
o The Solicitors Act 1974 allows solicitors to keep the interest earned on
client money placed on general deposit.
Property transactions – acting as stakeholder: client money held for buyer
and seller jointly
o Credit seller’s ledger account with note that it is held jointly
o Make an inter-client transfer on the day of sale completion
Joint account – money is client money, regulated by
o Regular statement every 5 weeks
o Central record of costs notifications
Solicitors may operate a client’s bank account where power of attorney and
must
o Produce statements every 5 weeks
o Keep a central record of bills/costs
TPMA accounts – managed by a third party, will not be classed as client money
o FCA regulated
o Potential cost savings and enhanced security
VAT
Where registered for VAT must charge customers on taxable supply, goods
and services made in the furtherance of business – rate of 20%
Do not charge on disbursements paid on behalf of Clients (where for the client’s
use and not the solicitor).
o Invoice addressed to Client – Agency Basis
Firm uses Client money where possible, DR the Client ledger
Give the Client the original suppliers’ invoice
o Invoice addressed to the Firm – Principal basis
Recorded on the cash account and VAT on HRMC account
Firm uses own money to pay, debiting the Client ledger business
side
Must give the client a VAT invoice
Compliance
