Members in practice scheme requirements

Professional indemnity insurance (PII)

PII is a mandatory requirement for all members in practice. The level of cover you need depends on the total gross fee income (net of VAT) of your business and your business type. For details of the level of cover you must have please see schedule 2 to the regulations. Although AAT specifies a minimum level of cover you are required to have, you are strongly advised to undertake a risk assessment to determine a level of PII which is adequate for your practice. A risk assessment should take into account the type of clients you have and the type of work you undertake. Read more information on carrying out a risk assessment and calculating an appropriate level of PII.

It is your responsibility to arrange your own PII cover. For a list of some companies that provide PII please see our providers list.

If you carry out a small amount of work for clients you may be eligible to apply for a fixed premium policy which will give you the minimum amount of PII cover required by AAT’s regulations. Details of the fixed premium policy will be sent to you with your members in practice application form. Alternatively visit aat.org.uk/pii or contact the Members in Practice team.

If you cease working in practice it is strongly recommended that you maintain your PII for a minimum period of six years after you have ceased your business. It should be noted that PII policies are usually provided on a claims-made basis which means you may not be covered where a claim is made against you after your PII has expired for work you have undertaken before your PII lapsed.

Continuity of practice

As a registered or licensed member in practice you have a professional obligation to your clients to ensure that your practice operates effectively and can continue to operate if you are absent from your work for any length of time, such as in the case of serious illness. It is for this reason that a Continuity of Practice Agreement is a mandatory requirement for all AAT members in practice with more than six clients.

If you are in practice with a fellow director or partner, they may provide the continuity of cover, as could a suitably qualified existing employee engaged within your business. However, where you work alone you will need to arrange for an appropriately experienced individual to provide continuity of cover to ensure your practice continues to operate effectively in your absence. The individual providing cover will need to have sufficient experience and expertise. In addition, their procedures, fee structure and type of services provided will need to be compatible.

It is important that the person you nominate is in full agreement to this arrangement and understands their obligations in the event of their being called upon to undertake some or all of the work for which you are approved, on your behalf. It is vital that your alternate is independent of your clients and capable of operating without conflict of interest.

If you are a sole trader with six or fewer clients it may not be necessary for you to have a Continuity of Practice Agreement in place. However, you should ensure that:

• your clients are aware, understand and agree to this
• this agreement and decision is documented by both parties in a letter of engagement or other appropriate communication.

If you have six or fewer clients and do not have a Continuity of Practice Agreement in place you must complete a declaration form.

If you need help finding an appropriate individual to take on this role, you may wish to:

• search our directory of members in practice
• post a note on the members in practice discussion forum
   

Professional ethics

As a member in practice, you must keep to the AAT’s Code of Professional Ethics. In particular:

• you must not offer services that are outside your competence. If you do, it may be considered a disciplinary matter
• if you are a student or member of one of the chartered and certified bodies you should ensure you also keep to the regulations of that professional body
• you must have a letter of engagement for each client. Sample letters of engagement are available in the Practice Management toolkit and at aat.org.uk/mip
• you must act according to regulation 24 on client monies.

AAT’s Code of Professional Ethics cannot cover every possible situation. If you are in any doubt about a particular circumstance or course of action, please contact the Conduct and Compliance team for advice.

AML and Professional Ethics diagnostic tests

AAT has developed two online diagnostic tests which all members in practice can use to help them gain an understanding of the Anti Money Laundering Legislation and professional ethics. The tests are tools that aid in the understanding of these areas, and identify any gaps in knowledge. They are not formal assessments.

To be eligible for a practising licence you will be required to submit evidence with your licence application that you have successfully completed both tests (an email confirmation and certificate will be available to print). To be successful you will need to achieve the pass rate of 71%. We encourage all members in practice to use the tests as learning tools to form part of your CPD.  Access the diagnostic tests here.

Gross fee income below £1,000?

If you earn below £1,000 from the services you offer to clients you are required to join the scheme for members in practice. However, in recognition of the amount of work you undertake AAT will be your supervisory authority for compliance with the Money Laundering Regulations free of charge. Please refer to the guidance to regulation 4 for details of how to apply to be registered on the scheme and regulation 6 for details of how to apply to be licensed on the scheme.

AML and Professional Ethics diagnostic tests

AAT has developed two online diagnostic tests which all members in practice can use to help them gain an understanding of the Anti Money Laundering Legislation and professional ethics.

The tests are tools that aid in the understanding of these areas, and identify any gaps in knowledge. They are not formal assessments.

To be eligible for a practising licence you will be required to submit evidence with your licence application that you have successfully completed both tests (an email confirmation and certificate will be available to print).

To be successful you will need to achieve the pass rate of 71%. We encourage all members in practice to use the tests as learning tools to form part of your CPD.  Access the diagnostic tests here.

Gross fee income below £1,000

If you earn below £1,000 from the services you offer to clients you are required to join the scheme for members in practice. However, in recognition of the amount of work you undertake AAT will be your supervisory authority for compliance with the Money Laundering Regulations free of charge. Please refer to the guidance to regulation 4 for details of how to apply to be registered on the scheme and regulation 6 for details of how to apply to be licensed on the scheme.