Why this question is harder than it looks
There are two client money regimes in this sector and they were made forty years apart. Estate agency work — selling — sits under the Estate Agents Act 1979, with a statutory trust under s.13, a client account under s.14, prescribed records under the 1981 Regulations and an annual audit by a qualified auditor. Letting agency work sits under the Client Money Protection Regulations 2019, which require membership of an approved scheme, and the client account obligation comes not from those Regulations but from the scheme approval conditions at SI 2018/751 reg 5(2)(f).
An agency doing both is in both, simultaneously, with two different audit triggers. An agency doing one and assuming it is in the other tends to be compliant with the wrong rulebook — most often a lettings business that has grown into sales and has never had the regulation 8(1) audit.
“We do not hold client money” is a real answer
MHCLG's enforcement guidance sets out the evidence it accepts: the tenant pays rent direct to the landlord, deposits are paid direct to the landlord, and maintenance invoices are issued direct to the client. If that is genuinely how the business runs, no CMP scheme is required.
What catches people is partial application. The guidance lists seven categories of client money — rent held after fees are deducted, utilities or council tax held in advance, one-off repair payments, maintenance floats, miscellaneous advance payments for professional work, security deposits in the window before they are protected, and holding deposits. A float sitting in your account for a landlord's repairs is client money whether or not the rest of the business touches anyone else's cash.
What this tool cannot tell you
Whether the money you hold is what you think it is. It takes your answers at face value. If you are unsure whether a balance is client money, that uncertainty is itself the finding — and it is the first thing worth a proper look, because the penalty for holding client money outside a scheme is up to £30,000, proved to the criminal standard.