New guidance has been produced by the Chartered Institute of Taxation (CIOT) which explains that, under the Legal Services Act 2007, the drafting, preparing and execution of deeds is a 'reserved activity' and can only be carried out by an authorised or exempt person.

The guidance is potentially a big issue for accountants and tax advisers, as HMRC often propose to use a deed to settle tax enquiries, and accountants are often asked by their clients to prepare dividend waivers, which are only effective if executed by deed as there is no consideration.

As the preparation of a deed is a 'reserved activity', only those who are members of the Law Society or the Bar are entitled to prepare deeds; therefore, the preparation of a deed is not something accountants can currently carry out.

Accountants would therefore only be authorised to prepare a deed of dividend waiver if they are authorised to do so under the Legal Services Act 2007, or if they are exempt.

It should also be noted that it is a criminal offence to carry on a reserved legal activity when not entitled to do so and a breach of professional guidelines; therefore, it is advised that accountants seek legal advice if they are uncertain whether a document is a deed or not.

If you wish to discuss any of the content above in more detail, or need assistance in preparing a deed of waiver of dividend, please contact Mairead Platt (mairead.platt@brabners.com) or Nikki Whittle (nicola.whittle@brabners.com).