All law firms must submit annual accountants’ reports under new SRA rules

15 June 2026 | posted in Accounting services

The Solicitor’s Regulation Authority is introducing new rules to strengthen protections around client money.  All law firms must submit annual accountants’ reports whether qualified or not.

The rules are expected to be introduced in early 2027. The move is designed to protect client money in response to the collapse of Axiom Ince and SSB Law which collectively resulted in losses of £100m.

Key changes

• All law firms that hold client money will have to submit annual accountants’ reports to the SRA whether qualified or not. Currently, only qualified reports have to go to the SRA
• You will need to file a mandatory annual declaration each year to confirm:
  • Your accounting period,
  • Your reporting accountants details
  • Your exemption status

The declaration must be filed even if you are exempt.

• If exemptions apply, you will need to provide information on your exemption status
• Penalties will be introduced for late or non-submission.

Jen Nixon, Partner and Legal Sector specialist at Moore East Midlands said:

“While we absolutely welcome any steps that strengthen the protection of client money, these new SRA requirements do introduce an additional layer of compliance for law firms to navigate. 2027 may feel some way off, but in reality, firms need to start preparing now. Getting this wrong could be costly and disruptive.

The good news is that you don’t have to tackle this alone. Moore can support you by preparing your annual accountant’s report and ensuring you remain fully compliant with the new rules.”

Separation of the COLP and COFA roles

Additionally, higher risk firms, (those with a turnover of more than £600,000 or holding more than £2m of client money), will have to put steps in place internally to ensure that the individuals who can make significant decisions about how the firm is run cannot also be the compliance officer for legal practice and finance and administration.

The SRA says separating these roles will ensure that “no single individual can both run a firm and oversee its compliance, including with client money rules”.

This effectively separates the COLP (Compliance Officer for Legal Practice) and COFA (Compliance Officer for Finance and Administration) roles, meaning these roles can no longer be held by the same person.

The SRA recognises that this may prove challenging for smaller, owner managed firms, and is introducing a partial exemption in these cases to allow for the practical constraints in separating out roles.

When do the changes come into effect?

The new rules are subject to approval by the Legal Services Board and are expected to come into force in early 2027.

How Moore can help

For further advice and guidance, or for help preparing the annual accountant’s report, get in touch with our specialist legal sector team today.

• Peterborough accountants: T 01733 397300
• Corby accountants: T 01536 461900
• Northampton accountants: T 01604 654254