Receipts, payments & transfers
Every receipt, payment and transfer of client money must be properly authorised, promptly recorded and made only within the funds held for that client.
What "Receipts, payments & transfers" covers
- Keep accurate, contemporaneous and chronological records of all receipts and payments of client money in the client ledgers and cash book: rule 8.1.
- Withdraw client money from the client account only where it is for the purpose for which it is held and on the client's instructions or with proper authority: rule 5.1.
- Only withdraw in respect of a client as much as is held for that client: you must not create an overdrawn client ledger (which would use another client's money): rule 5.3.
- A transfer from client to business account is permitted once a bill or other written notification of costs has been given and the money is due to the firm.
- A transfer between clients must reflect a genuine underlying transaction and be properly recorded.
- Round-sum transfers to the office account on account of costs are not permitted without a bill.
- Records must show, for each client, all dealings with that client's money and the running balance held.
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For receipts, payments & transfers, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Overdrawing a client ledger, thereby using one client's money for another.
- Transferring costs to the office account before delivering a bill.
- Keeping incomplete or non-contemporaneous records of client money.
Learn this subtopic in the course
A video lesson, notes and exam-style practice on receipts, payments & transfers.
FAQ
Is receipts, payments & transfers tested on SQE1?
Yes — receipts, payments & transfers is part of the SQE1 Solicitors Accounts syllabus (FLK2) and can appear in single best answer questions.
How is receipts, payments & transfers examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (rule 5.1 (proper withdrawals), rule 5.3 (only up to funds held)) helps.