When UK accounting firms share data with their outsourcing partner/s, they are responsible for its safety at all times. As per GDPR compliance, the term Data Controller Responsibility holds true for firms whether doing business onshore or offshore. The Data Controlled Responsibilities puts accountability right on the doorstep of the accounting firm.
This comes with a certain level of responsibilities with receiving, storing and transferring data. Failing to meet compliance can lead to certain penalties. Under the GDPR, these penalties are on the spectrum of low to high-tier violations are anywhere between £8.7 million and £17.5 million.
The emphasis of ensuring compliance comes directly from the Information Commissioner’s Office (ICO). Companies that outsource accounting services to offshore locations are not out of the woods either. Head of Business Services at ICO, Faye Spencer states:
“Accountants are a key part of this network, and it’s clear from our engagement with SMEs that many of them are reliant on their accountant to ensure their business dealings are compliant with data protection laws.”
This blog is a guide for accounting practices on navigating the GDPR requirements for accounting firms UK. It also provides a checklist for UK accounting practices to ensure compliance with GDPR when granting an outsourcing service access to clients’ data.
GDPR Requirements for UK Accounting Firms Using Offshore Teams
The following section below lists the GDPR requirements that UK accounting firms must adhere to when
DUAA legislation
On 19 June 2025, the Data (Use and Access) Act 2025 (DUAA) received royal assent, with its provisions phased in overtime. The Act requires that, when transferring personal data to non-EEA locations, accounting practices must ensure appropriate safeguards. These safeguards may include the UK International Data Transfer Agreement or similar measures. The Act emphasises that the protection standards should not be materially lower than those within the EEA.
Regarding Automated Decision-Making (ADM), the Act creates a more flexible framework that moves away from a strict prohibition of solely automated, significant decisions. Nonetheless, accounting practices seeking GDPR offshore outsourcing UK partners must implement safeguards, including providing information, enabling clients to contest decisions, and facilitating “meaningful human intervention” with their outsourced accounting partner.
Detailed Contracts (Article 28)
Under Article 28 of the UK GDPR, any accounting practice that engages an outsourcing partner must enter into a legally binding contract. This contract is a “Data Processing Agreement (DPA). The skeleton of this contract must include the scope of the service and the duration of the service exchange. On top of that, both of the entities under this legally binding contract must include the respective purpose of the service exchange, to emphasise the purpose of data transfer, especially in the case of international waters such as India and the Philippines. One key action a UK accounting firm can take is to include a clause in the contract that allows the firm to audit its outsourcing partner to ensure GDPR compliance when outsourcing accounting offshore.
New ICO guidelines
When looking for an outsourcing provider in another country, UK accountants need to consider several factors. The ICO has released new guidance on IDTAs and the UK Addendum regarding the transfer of data from one country to another. In addition, IDTAs will require firms to conduct a TRA to determine if the receiving country’s data protection laws provide adequate protection. The ICO’s guidance also addresses transparency, with the expectation that firms will provide updated Privacy Notices to inform clients that their information may be processed outside of the UK.
Ensure DPIA compliance
The process of GDPR offshore outsourcing UK accounting practices often involves providing a specific level of access to the client’s financial data. Within this process, accounting practices are obligated to remain DPIA compliant. Under this, accounting practices must analyse and label data as “likely to result in a high risk” when it reaches certain thresholds. The process involves detailing the reason/scope of transferring the data. The detailing process also involves documenting the safeguards enforced by the accounting practice and also put in place to mitigate identified risks.
Checklist to ensure GDPR Compliance for UK Accounting Practices using Outsourcing Services
Has a formal Data Processing Agreement (DPA) been drafted, explicitly outlining the processor’s obligations?
A formally drafted DPA allows UK accounting practices to work within a transparent legal framework with their outsourcing partner. It also functions as an instruction manual for the outsourcing partner on what specific data security practices are expected from them. A detailed DPA also allows for instructions for immediate actions from the outsourcing partner in case of data breach.
Does the service provider hold ISO 27001 (information security) or SOC 2 certification?
Ensuring that the outsourcing service provider holds an industry-standard data security certification is the first step before entering into a service exchange contract. ISO 27001 verifies that the service provider holds a proper and strong Information Security Management System that is necessary when exchanging client’s financial information. ISO SOC 2 certification ensures that the service provider has imposed strong data security measures that meet the required GDPR requirements for accounting firms in the UK.
One sign of analysing an opaque data security measure is how efficiently and quickly the response time of the service provider is in case of a data breach. How quickly can they resolve the error and how efficiently can they inform the Accounting Practice.
Do we have documentation detailing a map of all data being transferred, including what, where, and who has access?
Since the Record of Processing Activities (RoPA) is mandatory under GDPR, accounting practices are obligated to document the details of the data exchange. The best practices for accounting practices are to have a “living document” that gets continuously updated during the entire duration of the service exchange. The document tracks the full lifecycle of the data during the entire duration of the service exchange.
How is the outsourcing provider securing their remote cloud access?
An important factor to consider when selecting a reliable outsourcing provider is the strength of their security protocols for internal data. For example, the provider can ensure that its customers’ data is secure by implementing measures such as encrypted and limited, timed cloud access.
Are there policies in place to enforce password requirements? Are Multi-Factor Authentication (MFA) processes implemented?
By enforcing strict password policies, the accounting practice can ensure that only authorised users have access to their clients’ data. One way it can work during data transfer is to require that data policies include requirements for strong, specific passwords that are updated periodically. It’s especially effective when password access is enforced under the principle of least privilege.
Multi-Factor Authentication is another form of dynamic passwords, like unlocking multiple locks to access one door. The process of MFAs includes the outsourcing provider undergoing multiple authentication processes and criteria to access the client’s financial data. Preventing risks of an unauthorised entity from accessing.
Have we established rule-based access, ensuring limited least privileged access to the client’s data?
To establish robust rule-based access and ensure limited least privileged access for offshore teams, UK accounting firms should implement technical controls like Role-Based Access Control (RBAC). This can be achieved by utilising secure cloud-based portals or Virtual Desktop Infrastructures (VDI) that restrict data visibility based on specific job functions, preventing the downloading or unauthorised sharing of sensitive client information. By enforcing these strict boundaries, firms ensure that each member of the outsourced team only interacts with the precise data set required for their assigned task, effectively minimising the internal and external attack surface.
Has the outsourced team received formal training on UK GDPR requirements?
Ensuring that the outsourced team has received formal training on UK GDPR requirements is a critical legal mandate. Under the UK GDPR, both the accounting practice and the offshore team must demonstrate accountability through documented training programs. This training should cover essential areas such as data subject rights, incident reporting protocols, and the secure handling of Personally Identifiable Information (PII). This is to ensure the offshore staff maintain the same high standards of data protection expected within the UK.
Conclusion
As accounting practices continue to leverage the resourcefulness of outsourcing as a strategic advantage, they must continue to adapt to the GDPR framework. The framework remains dynamic, as technological advances in cyberattacks continue to accelerate. The primary way to maintain GDPR compliance when outsourcing accounting offshore while leveraging the strategic benefits of an outsourcing partner is to have a reliable partner.
A reliable outsourcing partner makes the process of being data security compliant as efficient as possible. An ideal outsourcing firm prioritises its own data security measures. That gives their clients safety and assurance of the sensitive financial data transfers, because they understand the stakes of data security involved.
This is why AcoBloom’s accounting services make an impact by always ensuring GDPR compliance for their clients. They achieve this by providing advanced technological services and data security of the highest level.
