Content
U-Turns Galore
Premises, Promises
Filing Bonus
RIP: 0% Rate
His and Hers
Party Spirit
State Of The Union
VAT's The Point?
Going Dutch
Away Win For Revenue
WIP-Round
The Best Land Plans
Tax Free Gizmos
Where Theres A Will
Do You Work Here?
Out Of The Shadows
Sacrifice Works
Home Sweet Office
Sauce For The Goose
Blissful Ignorance
PC Or Not PC?
Lost On Penalties
Worth The Paper
Carry The Can
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You probably know that being a director of a company comes with a number of legal responsibilities - most basically, for getting the annual returns in to Companies House on pain of fines, but going all the way up to wrongful trading by the company or failing to comply with health and safety rules. Directors also have a slightly stricter tax regime than ordinary employees. You might think it's pretty clear who is a director - the cigars, the big car, the executive washroom spring to mind. Or, aside from the daydream, the official appointment in the company's statutory books and occasionally attending a board meeting. But the law also treats people as "shadow directors" - with all the duties that the law imposes - anyone "in accordance with whose directions or instructions the directors of the company are accustomed to act". This is aimed at someone who runs a company from the background, appointing some puppets to hide behind, but it is potentially much wider than that. You could be treated as a shadow director if you habitually help a friend with the running of his company, or if you are a shareholder who takes a very active role without actually being appointed as a director. It's important to know, because you don't want to be held responsible without realising that you could be. A recent case has given some reassurance that the law doesn't take this to a ridiculous degree. A judge ruled that a shadow director has to do something positive - give some instructions or directions - and can't simply be a person that the directors would obey if he said anything. There must be a number of occasions on which the instructions are followed for the word "accustomed" to come into play. And there must be at least a majority of the board going along with the shadow director, or "the directors" are not being influenced as a whole. If you are concerned that you might be too close to a company and could fall foul of this rule, please discuss it with us.  |
© Bayar Hughes & Co., 2010.