Should you tell clients when you've used AI on their work?

There's a gap between what clients expect and what practices assume. In Tolley's spring 2024 survey of 446 UK tax practitioners, 83% of in-house tax teams said they expected to be told if their external advisers had used AI. Among people in private practice, only 50% thought their clients wanted to know (Tolley, May 2024).

That's a 33-point gap between what clients say and what their advisers assume. It isn't a problem until a client asks, and by then it's an awkward conversation rather than a line in a letter.

Does ICAEW expect you to tell clients?

Yes. ICAEW's dos and don'ts for using AI include "be transparent", which it explains as making it clear when AI has been used in processes and in creating outputs. The same guidance asks firms to keep client and confidential data off public AI tools and to review AI output with professional scepticism (ICAEW, Dos and don'ts of using AI).

ICAEW hasn't said how to be transparent, or at what level of detail. That's left to the firm, which is reasonable, because a practice that uses an AI feature inside its bookkeeping software is in a different position from one that drafts tax advice with a chatbot.

What does "using AI" cover?

More than most partners realise. The Xero survey of 515 UK accountants and bookkeepers in August 2025 found 98% of practices using AI in some way for day-to-day tasks (Xero, Cebr and Censuswide, November 2025). Some of that is deliberate. A lot of it is features that arrived in software the practice already paid for: transaction categorisation, draft replies in the inbox, meeting notes written by the video call tool.

So the first job is a list. Which tools and features in the practice use AI, what they're used for, and whether any client information goes into them. The anonymous staff survey I describe in the ICAEW article is the quickest way to get an honest answer.

Where should the disclosure go?

In the engagement letter, in one or two sentences. Something close to this:

"We use AI tools to help with some of our work, such as drafting and summarising. Any work that goes to you, or to HMRC, is reviewed and approved by a qualified member of our team, who remains responsible for it. We don't put your personal or confidential information into AI tools that we haven't approved for that purpose."

Three things make that sentence work. It says AI is used, so nobody is surprised later. It says a person is responsible, which is what clients want to hear. And it says what doesn't happen to their data, which is the question behind the question.

If your engagement letters are already out for the year, a short note with the next piece of work does the same job, and the clause goes into the next batch.

What if a client says no?

A few will. Usually the worry behind it is a specific one, their data ending up somewhere public, and the sentence above answers it. If a client still wants their work done without AI, note it on their file and tell the team. It's their work.

I lead a live AI rollout inside a regulated business, so I've had to answer this question myself, in writing, rather than in theory. Agreeing the sentence before anyone asks is what keeps the later conversations short.

What about the clients who never ask?

They're the reason to put it in writing anyway. Tolley's figure says most clients expect to be told. Telling them in the engagement letter, before any work starts, means the ones who care have been told and the ones who don't haven't been bothered.

It also protects the practice. If AI has helped with a piece of work and the client later finds out another way, "it's in paragraph 9 of your engagement letter" is a better answer than silence.

What should a practice do this month?

List every AI tool and feature in use, write the engagement letter sentence, and send it with the next batch of letters. If a client objects, record it on their file.

• Run the anonymous staff survey, or use the answers if you already have them, to list what's in use.
• Draft the sentence. Keep it to what you do, who's responsible, and what doesn't happen to client data.
• Add it to your engagement letter template and to the next renewal batch.
• Tell the team the sentence exists, so they can answer the question the same way.

My AI governance kit for accountancy practices has the engagement letter wording, a client FAQ and the approved tools register, mapped to ICAEW's guidance. If you'd rather I set it up with your team, that's the team AI rollout.

Sources

1. 01Tolley, How Generative AI is Transforming Tax Practice. Survey of 446 UK tax practitioners, March to May 2024.
2. 02ICAEW, Dos and don'ts of using AI. icaew.com/technical/technology/artificial-intelligence/generative-ai-guide/dos-and-donts
3. 03Xero, with Cebr and Censuswide, Accounting sector profits surge with AI adoption, 3 November 2025. Survey of 515 UK accountants and bookkeepers, 22 to 29 August 2025.

This article is general information, not professional or legal advice. Check current ICAEW and ICO guidance for your practice.