Lasting Powers of Attorney for Business
The Mental Health (Discrimination) Act 2013 now necessitates that individuals involved in businesses, whether Directors, Partners or Sole Traders should have in place Business Lasting Powers of Attorney (LPAs.)
Under the Act, mentally incapable Directors, Partners and business owners are no longer removed if they lack mental capacity, either long term or temporarily. This means you and your clients need to take steps to protect your businesses.
The life expectancy of a business is 29 days, whether a Sole Trader, Partnership or Limited Company. If there are no plans in place for someone to have the legal authority to act on behalf of an individual in their business capacity, including operating bank accounts and overseeing the running of the business, the banks will freeze the business accounts. It only takes one Director or Partner without an LPA, regardless of how many other Directors or Partners that exist, to mean staff and creditors do not get paid, loans default and rent or mortgages go into arrears. After 28 days, creditors can apply to Court – 29 days…
Lasting Powers of Attorney for Business
Business LPAs solve that problem. An LPA, is a legal document that enables a selected person, or persons, to act on behalf of an individual who is mentally or physically unable to do it themselves or to act in the stead of that Director, Partner or Sole Trader.
A lack of knowledge under the new legislation is putting businesses at risk of being left in limbo or going under. People tend to think things like this will never happen to them or they have to be old before they suffer a debilitating illness, but business people are no more immune to injury or illness than the rest of us. I myself, at 35 was temporarily incapacitated with meningitis for 2 months earlier this year.
Accidents and illnesses that leave people incapacitated or hospitalised for extended periods can strike at any time and any age, over 22,660 people were seriously injured in road traffic accidents last year and over 13,000 people in England and Wales under retirement age suffer a stroke each year.
Directors and Partners have a duty to act responsibly (s172 (1) & 174 Company Act 2006) and you may be in breach of this if you did not consider putting an LPA in place to cover a possible eventuality that would have a significant detriment on their colleagues, staff and business operation.
Allowable taxable expense
The good news is that creating these LPAs is an allowable taxable expense so it would make sense to take advice on this issue and safeguard your business. Should you wish to arrange a meeting to provide you with further information in relation to Business LPAs, answer any queries that you may have and explore ways that we may work together in the future for the benefit of your business then please do not hesitate to contact our specialist team at your nearest office.
Alex Spurr
