The rules governing when a firm may take its costs from client money — a bill first, defined limits, and accurate entries to match.
Taking fees from client account without following the correct sequence is one of the most common breaches of the SRA Accounts Rules 2019. This chapter begins with the requirement to deliver a bill before transferring costs, the limits on what may be moved, and what happens when client money falls short or part of the bill is disputed. It then explains how money received for costs is classified as client or business money depending on timing, before working through the double-entry treatment of profit costs and VAT — raising a bill, transferring costs and receiving payment direct into business account. It closes with the ledger options where a firm acts for both borrower and lender, and why the mortgage advance cannot be used to settle the borrower's fees.
