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We started the DESLOK INTERNATIONAL Financial Services Limited to provide unparalleled, personalised accounting services to a broad range of clients across Hong Kong & Greater China Market. As your accountant, we are here to ensure that all of your  decisions are made carefully and with your best interests in mind. Whatever you need, we have the experience to take care of your accounting and taxes affairs.

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Our firm information:

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DESLOK INTERNATIONAL Financial Services Limited (DIFS), is registered in Hong Kong SAR, China. Our Hong Kong business address is Level 19, Two International Finance Centre, 8 Finance Street, Central, Hong Kong. Our Business Registration certificate No. is 65294147-000.

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Terms and conditions

 

Applicable law

  1. A practitioner should insert the name of the legal jurisdiction under which their practice operates.

 

  1. A practitioner needs to be aware that in a consumer contract, a clause requiring the consumer to bring any proceedings in a jurisdiction other than that of the consumer’s domicile will in most circumstances be unenforceable, providing the trader pursues commercial/professional activities in the region in which the consumer is domiciled or has directed such activities to that region.

 

  1. These letters have been prepared on the basis of applicable law in Hong Kong.

 

Client identification and verification

  1. Under the anti-money laundering legislation a practitioner must have identification procedures in place to confirm the identity of their clients. These procedures should be satisfied before a practitioner agrees to act for a new client.

 

Client money

  1. If the practice never holds client money and is not likely to do so in the future, a practitioner may decide to omit this paragraph. If the practice is likely to hold client money a practitioner should follow the Cap 615 AMLO and amend the standard terms and conditions if appropriate.

 

Complaints

  1. All new clients should be informed in writing of the name of a person who can be contacted to receive complaints about the services provided. Clients should also be informed of their right to complain to a practitioner’s professional body. It is in the interests of the practice that complaints should be investigated promptly and courteously. Where the person investigating the complaint finds it wholly or partly justified, the practice should take steps to ensure that the complaint is resolved as soon as possible. For more details on the handling of complaints a practitioner should refer to their professional body’s guidance.

 

Confidentiality

  1. A practitioner is obliged to keep client information confidential and to take all reasonable steps to preserve confidentiality. However, a practitioner may be required by law (whether in the Hong Kong, or overseas), by regulatory bodies or by insurers to disclose information about their clients. This has therefore been covered in the separate privacy notice included.        

  2. A practitioner should be aware that they remain responsible for client information remaining confidential even where work has been subcontracted or outsourced to third parties, who should also be placed under an obligation of confidentiality.

 

Conflicts of interest

  1. A practitioner should assess the significance of any actual or perceived conflict of interest and should not allow it to compromise their professional or business judgement. Examples of conflict of interest include where two clients are competing for the same third-party contract; where two clients are on different sides of a commercial transaction or dispute; the practitioner is acting for both parties (for example, in divorce proceedings or the dissolution of a business partnership); or giving advice to a client where a practitioner has an interest in a competitor.

 

Data protection

  1. The Cap 486 Personal Data (Privacy) Ordinance and the General Data Protection Regulation (GDPR) contains rules for processing personal information and applies to paper records as well as those held on computer.

 

Disengagement

  1. A practitioner will find it useful to issue a disengagement letter when they cease acting for a client. This can be used to manage an ex-client’s expectations and to provide some protection to a practitioner against potential claims by the ex-client.

 

  1. A disengagement letter will normally address the following:

 

  • a summary of services provided up to the date of ceasing to act;

  • a note of any further action to be taken by a practitioner;

  • a note of any outstanding matters that either the ex-client or the new advisers will need to address;

  • details of any impending deadlines and the action required;

  • a practitioner’s willingness or otherwise to:

    • assist the new advisers to resolve outstanding issues with Inland Revenue Department or others

    • provide copy papers to the new advisers;

  • details of any outstanding fees; and

  • a note indicating whether a practitioner or their successor is to advise Inland Revenue Department of the change.

 

Electronic and other communication

  1. The standard terms and conditions state that the practitioner is using virus-scanning software to reduce the risk of viruses and similar damaging items being transmitted. A practitioner should therefore ensure that their systems are set up to deal with the relevant scans. Data security is a fundamental requirement under data protection requirements.

 

Fees and payment terms

  1. Fee arrangements are a matter for commercial negotiation by a practitioner and should be agreed in writing. The template wording provided may not be appropriate in every particular case. Due regard should be given to the nature of the engagement and client relationship when setting fees. Possible arrangements include:

 

  • Time and expenses – where the charges are determined by reference to time spent and the level of expertise of the personnel involved.
     

  • Fixed fees – where a fixed amount is charged for an agreed assignment. In such cases the fees should be based upon a careful costing of the work. When the arrangement is to run on, say, beyond one year, a clause in the engagement letter should enable additional work to be charged and cost escalation to be recouped.
     

  • Contingent or success fees – these should be used with care and should not be offered if there is a risk that professional independence and integrity will be impaired in the conduct of work.

 

  • Fees that may be covered in whole or in part by professional fee insurance.

 

  1. The paragraphs in the standard terms and conditions relating to fees should reflect a practitioner’s standard approach to fee arrangements to avoid the need to amend them case by case. A practitioner who works on a contingency or success fee basis will need to amend the standard terms and conditions accordingly.

 

  1. A practitioner can reduce the risk of fee disputes by giving an indication of fees before work is started or by agreeing fees before issuing invoices. If an estimate or indication of fees is given, it is advisable to include this in the covering letter or a separate fee schedule sent with the schedules of services and standard terms and conditions and in any updates subsequently issued.

 

  1. Where fixed or contingent fees are agreed it is especially important to take care in describing the scope of the work they cover. This protects a practitioner’s position if unexpected additional work arises. It can be particularly important if the fixed fees are intended to cover any element of Inland Revenue Department enquiries because the time taken can vary considerably.

 

  1. Where a practitioner indicates the hourly rates for each member of the team and/or level of professional staff, it is also important to indicate when and how the client will be advised of changes in the hourly rates and of other relevant changes.

 

  1. In some cases the schedules to the engagement letters refer to the possibility of charging an additional fee where information has not been received by the date requested or returns are prepared in a short period. Where applicable this clause should be drawn to the client’s attention and they should be made aware that an additional fee will be charged.

 

Advanced fees or acting as a guarantor

  1. A practitioner may wish to obtain a guarantee for payment of fees incurred by a client from a third-party guarantor. If a practitioner does wish to do so, they should seek a separate agreement with the intended guarantor, in advance of entering into the engagement with the intended client. For example:

 

“Guarantee of payment of fees

 

I, XYZ, wish ADVISER to enter into an engagement with INTENDED CLIENT because..........

 

In consideration of ADVISER agreeing to enter into an engagement (“the engagement”) with INTENDED CLIENT, as set out in the draft engagement letter annexed to this guarantee, I XYZ, agree to pay all fees arising or incurred in accordance with the engagement in so far as the same are not paid by INTENDED CLIENT within x days of such fees arising, and to pay interest on any unpaid fees at the rate of xxx from the date of issue to the date of payment.”

 

Lien

  1. This clause, based on case law, highlights a practitioner’s right to retain documents belonging to the client that a practitioner has used in the performance of work for the client for which the fee has not been paid. However, the exercise of a lien is not straightforward and may conflict with other professional duties to the client. It is preferable to try to resolve disputes without recourse to the lien.

 

Limitation of liability

  1. A practitioner may wish to consider if it is appropriate that any sections covering limitation of liability are in bold font to draw the client’s attention to them.

 

  1. This section of the terms and conditions identifies a number of limitations to a practitioner’s liability. Where a practitioner wishes to limit their liability to their client, they should,

 

  1. A liability cap will only apply to those clients who have agreed the terms and conditions of the engagement letter. For example, personal tax work for the director of a corporate tax client would not be covered by the liability cap contained in the engagement letter for the corporate client, unless, unusually, the engagement letter specifically referred to personal tax work for the directors, and those directors have agreed explicitly by signing the engagement letter in a personal capacity or their implied agreement otherwise obtained in that personal capacity.

 

  1. The law is in a state of evolution and it is strongly recommended that independent legal advice is taken by a tax practitioner before including limits of liability in their engagement letters or standard terms and conditions. That is important where the amount at risk may be very large or the work involved is of particular difficulty. The advice should be checked from time to time to ensure that the wording used does not conflict with recent judicial decisions on reasonableness.

 

  1. If a court finds a limitation of liability term in a contract to be unfair, it is likely that all elements of that term of the contract will be held to be invalid, in which case a practitioner’s liability will be treated as unlimited. To withstand a challenge under this legislation, it is advisable to discuss the limitation with the client and ensure that it is reasonable in the context of the scale and nature of both the assignment and the practice. A practitioner must be able to demonstrate that the limit of the liability is fair and reasonable.

 

  1. Thus, a practitioner should consider the limit to be applied in any individual case by reference to such matters as the amount at stake, the assets likely to be available to the client to meet any liability or to meet any loss if a practitioner’s liability is limited and the insurance cover available to a practitioner. Before imposing a limit, a practitioner should clearly explain it to the client. The effect and the reasons for limiting liability should be made clear and the client should have the opportunity to consider the limit, to negotiate the limit if they think fit and to take independent advice before agreeing the limit. Where a relatively standard limit is applied, it is unlikely that much further negotiation will be practicable or desirable, and it is therefore important that the term is clear to the client. It is sensible for a practitioner to show that the limit has been considered – for example, circling the limit figure in the engagement letter. It is also prudent to make and retain a note of any discussion either with the client or internally.

 

Liability of third-party rights

  1. It is in a practitioner’s interest to exclude liability to third parties and also to seek an indemnity from the client against any liability to a third party to whom the client has disclosed advice or information.

 

  1. The test of reasonableness where liability to third parties is to be excluded is less strict than in the case of the client under a contract. However, its reasonableness will be assessed having regard to all the circumstances obtaining when the liability arose or would have arisen but for the notice, rather than at the time of entering into the engagement letter. So, the disclaimer should be in clear terms and the client should be made aware of the importance of not permitting a third party to rely on the advice.

 

  1. The simplest way to exclude contractual liability to third parties is to provide expressly that the terms of the contract shall not be enforceable by anyone other than the parties (save for any named exceptions).

 

  1. The standard terms and conditions include clauses relating to limitation of third party rights (and unauthorised disclosure). If a professional wishes to reduce the risk of non-contractual liability (e.g. in negligence) to third parties, he/she may seek to do so by notice, e.g. by clearly stating on a piece of written advice that it is not intended to be relied upon by anyone except the addressee and that no duty of care to anyone other than the addressee is assumed by the professional.

 

Period of engagement and termination

  1. The covering letter or the standard terms and conditions should make clear when an engagement begins and ends. It should be made clear that for one-off pieces of work the engagement ends when the work is completed. In relation to ongoing retainers, a practitioner should not cease to act for a client without giving them notice in writing, unless compelled to do so by law.

 

Reliance on advice

  1. Confirming advice in writing offers the greatest protection to both practitioner and client. There is a much lower risk of there being any misunderstanding over the facts upon which the advice is based or on the advice given if it is in writing. However, clients are often reluctant to bear the additional cost of written advice. A practitioner may delete this standard term if they are willing to accept the increased risk. Irrespective of which approach is adopted, it is important to keep a record of advice given to clients, whether this is a meeting note, note of telephone call or some other method. If advice is given orally and the client does not wish to pay for it to be confirmed in writing, a short letter or email written to the client confirming the gist of the oral advice is strongly recommended.

 

Retention of papers

  1. A practitioner should decide whether, as a matter of routine practice, to return all original documents or only those requested by the client. If records are retained by a practitioner, it will be important to ensure that these can be accessed. The length of time documents in the possession of a practitioner should be preserved is seven years in the standard terms and conditions.

 

  1. A practitioner should consider access to cloud accounting software by them and their clients following the termination of an engagement and make appropriate arrangements with the client. This is therefore referred to in standard terms and conditions.

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