Complete SRA Compliance Guide for UK Law Firms

Law firms can outsource their legal cashiering function while still holding client money, but the SRA Accounts Rules place the compliance burden firmly on the firm. This guide covers what outsourcing can and cannot transfer, the due-diligence checklist your COFA should complete before signing, a full-cost comparison framework, and the tax treatment of provider fees.

The legal cashier is the operational backbone of SRA client-money compliance: posting receipts, processing authorised withdrawals, preparing five-weekly reconciliations, and escalating potential breaches to the COFA. This guide explains the role from a firm-owner perspective, covering each SRA Accounts Rules 2019 duty the cashier executes and what to look for when hiring or managing one.

Money a firm handles as attorney or Court of Protection deputy is client money under SRA Accounts Rule 2.1(c), but it also sits inside the Office of the Public Guardian's supervision regime. This guide explains the client-account discipline, the OPG supervision levels, the deputy's security bond, the annual report and the VAT on the firm's fees.

A clean client account has every penny identified to a named client or matter, with a clear reason it is still held. Suspense entries, unidentified receipts and dormant balances are the three ways an account drifts from that ideal, and they are exactly what an accountant's report and an SRA inspection target. This guide explains the SRA's expectations, how the five-weekly reconciliation surfaces these balances, and a clean-up routine to run before the report.

A mixed payment is a single receipt that is partly the firm's own (office) money and partly client money. SRA Rule 4.2 requires you to allocate it promptly to the correct account. This guide shows how to classify each part, how to split it compliantly, and the Rule 4.3 discipline that stops you taking your fee before you have billed it. The standard is promptly: there is no fixed 14-day deadline.

When a firm is instructed by personal representatives to administer an estate, the money it holds (assets realised, property sale proceeds and funds awaiting distribution) is client money under the SRA Accounts Rules 2019. This guide sets out the probate-specific mechanics: one ledger per estate, the acute Rule 3.3 banking-facility trap, interest under Rule 7, distribution timed against the s.27 Trustee Act 1925 notice period, and closing the ledger to nil without a residual balance.

Residual or unclaimed client-account balances cannot be swept to office account. Client money can only be withdrawn on the Rule 5.1 conditions, and the clean route for a genuinely unreturnable balance is to pay it to a charity under the SRA's prescribed circumstances. A balance of £500 or less per matter can go to charity without SRA authorisation if every condition is met; over £500 needs the SRA's prior written authorisation. This guide sets out the £500 line, the conditions and the records to keep.

A growing number of firms choose not to operate a client account at all, routing transactional money through a TPMA and paying third parties directly so they never hold client money. The headline prize is that the Rule 12.1 accountant's-report trigger is not met. This guide sets out how the model works, the precise report position, the Compensation Fund and VAT trade-offs, and who it suits, keeping the Rule 12.1 trigger and the Rule 12.2 exemption properly distinct.

When a firm is named as executor or appointed as trustee it cannot charge by default. This guide explains the two routes to being paid (a professional charging clause under Trustee Act 2000 s.28 or the s.29 statutory default), the income tax, NIC and VAT on those fees, and the client-money status of the estate or trust money the firm controls.

A third-party managed account (TPMA) lets a law firm route client funds through an FCA-authorised payment institution, so the firm never holds or receives the money itself. Because of that, TPMA money is not client money under the SRA Accounts Rules. This guide explains what a TPMA is, how the escrow flow works, the exact Rule 11 conditions, where the FCA-provider requirement actually sits, and the firm's residual duties.

A firm's probate and estate administration fee is a standard-rated supply of legal services at 20%. The harder question is the outlays: a payment is a genuine disbursement (outside VAT) only if all eight HMRC conditions are met. This guide applies the eight-condition test to the outlays a probate matter generates (the probate application fee, office copies of the grant, s.27 Trustee Act 1925 statutory notices, Land Registry fees) and explains which costs are standard-rated recharges instead.

Essential guide covering SRA Accounts Rules compliance for client money handling, trust accounting requirements, and practical steps to avoid regulatory breaches.

COFAs face significant accounting responsibilities under SRA regulations, from client money oversight to financial controls. Understanding these duties is crucial for compliance and avoiding regulatory issues.

Proper client account reconciliation is essential for SRA compliance and protecting client money. This guide covers monthly reconciliation procedures, common issues, and compliance requirements for UK solicitors.

A working guide to solicitor trust accounting: holding client money in the client account, the three-way reconciliation cycle, client ledgers and controls, the COFA's responsibilities, choosing software, and the pitfalls that lead to SRA breaches. Links to the detailed rule-by-rule siblings without repeating them.

The SRA accountants report is the annual check on how an SRA-regulated firm handles client money. This hub explains what the report is, who needs one, what it covers, the six month deadline, and the difference between a qualified and an unqualified report, then points you to the detailed guides on exemption, triggers, and preparation.

A practical, rule-by-rule guide to the SRA Accounts Rules 2019 for firms in England and Wales: what counts as client money, how the client account works, the five-weekly reconciliation, the COFA's role, when you need an accountant's report (and when you are exempt), and the breaches inspectors find most often.