Acting for a client who lacks mental capacity

Q: Who can give instructions once capacity is lost?

An attorney under a lasting power of attorney. Section 9 of the Act defines an LPA as a power that includes authority to make decisions when the donor no longer has capacity, but it is not created until the instrument is registered, and the donor must have had capacity when signing it. Only a property and financial affairs LPA covers tax and accounts. An attorney under an enduring power of attorney. ICAEW notes that EPAs cover only property and financial affairs and that no new EPA can be registered since LPAs replaced them in October 2007, but existing EPAs still operate. A deputy. Where there is no attorney, someone can apply to the Court of Protection. GOV.UK explains that a property and financial affairs deputy receives a court order setting out what they can and cannot do and must send an annual report to the Office of the Public Guardian. Elsewhere the routes differ. GOV.UK says that in Scotland you cannot become a deputy but can set up a guardianship, and in Northern Ireland you can apply to become a controller. It also says someone who only looks after a person's benefits needs to be an appointee instead, which is a benefits role and does not give authority over tax affairs. If the client has already lost capacity and never made an LPA, it is too late to make one, because section 9 requires capacity at the time of signing. The family's route is then a deputyship application.

Q: How do you check the authority?

See the document. ICAEW suggests searching the relevant register to confirm the details and understand what powers the attorney or deputy holds. For LPAs registered in England and Wales on or after 17 July 2020, the donor or attorney can give an access code for the view a lasting power of attorney service. Search the register if needed. The Office of the Public Guardian's register search is free and, according to GOV.UK, OPG responds within 5 working days. Read the terms. Check whether it is a financial or a health and welfare LPA, whether attorneys must act jointly or may act jointly and severally, and whether the donor added restrictions. For a deputy, read the court order. Carry out due diligence. ICAEW says customer due diligence is needed on both the person exercising the power and the client. See customer due diligence for accountants. Update the engagement. Reissue the engagement letter so it records that instructions now come from the named attorney or deputy on the client's behalf, and who receives correspondence. Information about a client's health is special category data. The ICO says processing it needs both an Article 6 lawful basis and a separate Article 9 condition, so record only what you need.

Q: What does this look like in practice?

Illustration only. A retired landlord has used the firm for years. His daughter rings to say he has dementia and asks the firm to send her his tax return to sign. The firm asks whether there is an LPA. She provides an access code for a property and financial affairs LPA registered in 2021 appointing her and her brother jointly and severally. The firm checks it, completes due diligence on the daughter, sends a new engagement letter recording that she instructs on her father's behalf, and confirms she has told HMRC about the LPA. It keeps the father informed in plain terms on the points he can still follow, and declines her request to transfer rental income into her own name until the gift rules have been checked.

A client who loses mental capacity is still your client, but they can no longer give valid instructions on the decisions they cannot make. From that point you need instructions from someone with legal authority: an attorney under a registered lasting or enduring power of attorney, or a deputy appointed by the Court of Protection. Check that authority on the register, tell HMRC through the proper route, and do not act on instructions from relatives who hold no formal role.

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How do you tell whether a client has lost capacity?

In England and Wales the test is in the Mental Capacity Act 2005. Section 1 sets out the starting principles: a person must be assumed to have capacity unless it is established that they lack it, they are not to be treated as unable to decide unless all practicable steps to help them have been taken without success, and they are not to be treated as lacking capacity merely because they make an unwise decision.

Section 2 says a person lacks capacity in relation to a matter if, at the material time, they cannot make a decision for themselves because of an impairment of, or disturbance in the functioning of, the mind or brain. It does not matter whether this is permanent or temporary, and lack of capacity cannot be established merely by reference to age, appearance or a condition that might lead others to make unjustified assumptions. Section 3 says a person is unable to decide if they cannot understand the relevant information, retain it, use or weigh it, or communicate the decision.

Two points follow for an accountant. Capacity is decided matter by matter, so a client may still be able to approve a simple return but not a complex restructuring. And it can fluctuate. ICAEW’s helpsheet on vulnerable clients says staff are not expected to become health experts but should stay alert to indicators of vulnerability, and notes that a person’s position can vary from day to day or hour to hour. Where doubt arises, record what you saw, explain things simply and consider involving a medical professional through the family, rather than reaching your own diagnosis.

Who can give instructions once capacity is lost?

An attorney under a lasting power of attorney. Section 9 of the Act defines an LPA as a power that includes authority to make decisions when the donor no longer has capacity, but it is not created until the instrument is registered, and the donor must have had capacity when signing it. Only a property and financial affairs LPA covers tax and accounts.
An attorney under an enduring power of attorney. ICAEW notes that EPAs cover only property and financial affairs and that no new EPA can be registered since LPAs replaced them in October 2007, but existing EPAs still operate.
A deputy. Where there is no attorney, someone can apply to the Court of Protection. GOV.UK explains that a property and financial affairs deputy receives a court order setting out what they can and cannot do and must send an annual report to the Office of the Public Guardian.

Elsewhere the routes differ. GOV.UK says that in Scotland you cannot become a deputy but can set up a guardianship, and in Northern Ireland you can apply to become a controller. It also says someone who only looks after a person’s benefits needs to be an appointee instead, which is a benefits role and does not give authority over tax affairs.

If the client has already lost capacity and never made an LPA, it is too late to make one, because section 9 requires capacity at the time of signing. The family’s route is then a deputyship application.

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Does the attorney or deputy become your client?

No. ICAEW’s power of attorney helpsheet says the attorney or deputy does not become the client. Where the client has made a power of attorney, they remain the client acting through their agent; a deputy acts for the person as a statutory agent. In both cases the firm’s duty of care is to the person on whose behalf the attorney or deputy acts.

That shapes how you work. Section 1(5) of the Mental Capacity Act requires anything done for a person who lacks capacity to be done in their best interests. ICAEW’s vulnerable clients helpsheet stresses objectivity because such clients may be at risk of undue influence from others, including family members or carers. If an attorney asks for something that benefits themselves, such as a gift from the client’s money, check the limits first; see gifts by attorneys.

How do you check the authority?

See the document. ICAEW suggests searching the relevant register to confirm the details and understand what powers the attorney or deputy holds. For LPAs registered in England and Wales on or after 17 July 2020, the donor or attorney can give an access code for the view a lasting power of attorney service.
Search the register if needed. The Office of the Public Guardian’s register search is free and, according to GOV.UK, OPG responds within 5 working days.
Read the terms. Check whether it is a financial or a health and welfare LPA, whether attorneys must act jointly or may act jointly and severally, and whether the donor added restrictions. For a deputy, read the court order.
Carry out due diligence. ICAEW says customer due diligence is needed on both the person exercising the power and the client. See customer due diligence for accountants.
Update the engagement. Reissue the engagement letter so it records that instructions now come from the named attorney or deputy on the client’s behalf, and who receives correspondence.

Information about a client’s health is special category data. The ICO says processing it needs both an Article 6 lawful basis and a separate Article 9 condition, so record only what you need.

How does HMRC deal with an attorney or deputy?

HMRC needs to know about the power before it will deal with the attorney. Its guidance on getting help with tax says that once the person helping has a registered power of attorney, they must tell HMRC. They can do this by phone if the LPA was registered on or after 1 January 2016 in England or Wales, they have an LPA online account and they can make property and financial decisions; they give HMRC a 13 character access code beginning with V, which can only be given by phone. Otherwise they send an original or certified copy of the LPA by post, and HMRC may ask for one even after a phone call. The same guidance says that where there is no power of attorney, someone can set up a property and financial affairs deputyship to manage the person’s tax affairs.

Making Tax Digital for Income Tax has a specific exemption. HMRC’s guidance says a person is automatically exempt if their 2024 to 2025 return stated that they are not physically or mentally capable of providing information to HMRC and they have a power of attorney in place for someone in the UK, or a legally appointed deputy, controller or guardian.

The family side of these routes, including the trusted helper service, is explained in dealing with HMRC for a relative.

What if there is no attorney or deputy yet?

The firm is then in a difficult position. The client cannot give valid instructions on the decisions they lack capacity for, and a spouse or adult child has no authority simply because they are family. Confidentiality still applies: ICAEW’s vulnerable clients helpsheet flags confidentiality as a particular challenge where clients have let others join discussions. Practical steps are to keep doing only the work the client can still authorise, explain to the family that a deputyship application is needed, and keep a note of who asked for what. Deadlines may be missed while an application is pending; serious illness can support an appeal, as explained in illness as a reasonable excuse.

If the client is a company director or shareholder, separate questions arise about board decisions and voting; see powers of attorney for directors and shareholders.

What does this look like in practice?

Illustration only. A retired landlord has used the firm for years. His daughter rings to say he has dementia and asks the firm to send her his tax return to sign. The firm asks whether there is an LPA. She provides an access code for a property and financial affairs LPA registered in 2021 appointing her and her brother jointly and severally. The firm checks it, completes due diligence on the daughter, sends a new engagement letter recording that she instructs on her father’s behalf, and confirms she has told HMRC about the LPA. It keeps the father informed in plain terms on the points he can still follow, and declines her request to transfer rental income into her own name until the gift rules have been checked.

What mistakes come up most often?

Taking instructions from a relative who holds no LPA, EPA or deputyship.
Accepting an unregistered LPA, or a health and welfare LPA, as authority over tax.
Treating the attorney as the client and serving their interests.
Assuming a diagnosis means the client can decide nothing at all.
Forgetting that HMRC must be told separately about the power.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.