Why Solicitors Accounts Feels Hard — and Why That Is Good News
Solicitors Accounts is the SQE1 subject candidates dread most, and the one whose winnability they most often underestimate. It feels hard because it is unfamiliar — most people meet double-entry bookkeeping and the SRA Accounts Rules for the first time here. But the syllabus is small and finite: a handful of rules, applied to a handful of recurring scenarios. Learn the traps below and Accounts flips from your weakest FLK2 subject to a reliable source of marks.
This is the traps and worked examples companion to our full Solicitors Accounts revision guide — it assumes you know roughly what the Accounts Rules are and focuses on where candidates actually drop marks.
The Rule Everything Hangs On: Client Money vs Business Money
Almost every Accounts question is really one question: is this client money or business money, and is it in the right account?
- Client money is money you hold for a client or third party — money for their matter, money on account of their costs, money for disbursements not yet paid. It lives in a separate client bank account.
- Business money is the firm's own money — your fees once billed, and money to run the practice. It lives in the business account.
The cardinal sins the exam tests relentlessly: putting client money in the business account, using one client's money for another client's matter, and taking money as your fee before you have actually billed for it. Hold those three in your head and half the questions answer themselves.
Trap 1 — Mixed Receipts
A single payment that is part business, part client money. Example: a client sends £1,200 — £1,000 to settle your delivered bill, and £200 on account of a future court fee.
You have two correct options:
- Split on receipt: £1,000 into the business account (it is your billed fee), £200 into the client account (it is still the client's money).
- Bank it all into the client account, then promptly transfer the £1,000 business element out.
The wrong answer — and the tempting distractor — is to bank the whole £1,200 into the business account because "most of it is mine". The £200 is not yours yet.
Trap 2 — Money on Account of Costs Is Client Money
When a client pays you in advance "for your costs", that money is client money until you raise a bill. It goes in the client account. Only when you have delivered a bill can you treat the corresponding sum as yours and transfer it.
The trap: questions phrase it as "the client paid £2,000 for our fees", hoping you will treat it as business money on receipt. You cannot. No bill, no transfer.
Trap 3 — Disbursements and VAT
Two sub-traps live here:
- Paid vs unpaid disbursements. Money held to pay a disbursement you have not yet paid is client money. Once you pay it, treatment follows whether you paid from client or business funds.
- Agency vs principal method for VAT. Whether a disbursement carries VAT, and how you record it, depends on whether your firm acts as agent (passing on a supply made to the client) or principal (the supply was made to you). Get the method wrong and the VAT figure changes — and VAT is 20% — so the arithmetic distractor is built around exactly this confusion.
Trap 4 — Transfers From Client to Business Account
You may move money from the client account to the business account only for costs you have billed, and only up to the billed amount. Example:
- You hold £3,000 of client money on account of costs.
- You deliver a bill for £1,500 plus £300 VAT.
- You may now transfer £1,800 to the business account. The remaining £1,200 stays client money.
The trap is transferring the whole £3,000 because it "covers the bill". You can only ever take what you have billed.
Trap 5 — Residual Balances
Small leftover client balances you cannot return (the client has vanished) can be paid to charity without SRA authorisation if the amount is £500 or less per client — provided you keep proper records and have taken reasonable steps to return the money first. Above £500, you need SRA authorisation. Expect a question with a figure sitting just either side of £500.
Trap 6 — Interest
You must account to clients for a "fair sum" of interest on client money you hold — but the 2019 Accounts Rules set no prescribed rate or threshold. Questions that offer you a specific statutory rate or a fixed minimum balance are testing whether you know the rules moved away from prescription. The standard is fairness, judged on the facts.
Trap 7 — The Compliance Details
The discrete numbers that hand you easy marks if you have memorised them:
- Reconciliations of the client account at least every five weeks.
- Accounting records kept for at least six years.
- Accountant's report within six months of the period end — with an exemption where all client money is legal aid money, or the average client balance is £10,000 or less and the maximum is £250,000 or less.
How to Actually Drill This
Accounts rewards repetition more than reading. Work the worked examples in every chapter of the Solicitors Accounts study guide, then drill the recurring scenarios on a question bank until the entries are automatic. Because the scenario types are so finite, a focused candidate can go from feared to fluent in days, not weeks.
FAQ
Do I need to be good at maths for Solicitors Accounts?
No. The arithmetic is simple — addition, subtraction and 20% VAT. The difficulty is knowing which account money belongs in and when you can move it, not the calculation itself.
How many SQE1 questions are on Solicitors Accounts?
It is one of the FLK2 subjects and is sampled like the others, so it is worth securing — especially because the rules are finite and high-yield. See questions per topic.
Is double-entry bookkeeping tested?
You need to understand that every entry has two sides and which account each side affects (client vs business), but SQE1 tests this through scenario questions, not by asking you to keep a full set of books.
The Bottom Line
Solicitors Accounts is finite, mechanical and high-yield — the perfect subject to convert from dread to dependable marks. Nail the client-versus-business distinction, learn the seven traps above, and drill the scenarios until they are reflex. Our 13-book bundle includes the full Accounts guide with worked examples in every chapter, for £49.99.