Director duties UK & Companies House director responsibilities

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Introduction 

What are the director duties (UK) for an individual who runs their own contractor limited company? In addition, what’s the role of a contractor as a company director, and what does this entail? As a UK contracting professional, we must look at your official UK company director’s responsibilities and obligations. Indeed, when you’re a limited company contractor and a UK director, you should be aware of several Companies House director responsibilities and duties. Furthermore, contractors and UK company directors must keep up with these UK director responsibilities on an ongoing basis. This guide will consider the responsibilities of directors in a company. Moreover, we’ll investigate your director’s duties (UK) as a UK contractor with your limited company.

As a UK contractor, you’ll be a director of your own UK company. Therefore, besides your contracting work, you must consider your position as director. The role of a company director (UK) contains many responsibilities and specific official duties. What’s more, there are some general duties of directors to bear in mind as well. Therefore, this guide will consider what a director is responsible for and what duties they must adhere to.

Initial thoughts -contractor director duties and responsibilities 

Company director responsibilities (UK)

You should keep up with your Companies House director responsibilities when you’re a director. This is because you must maintain certain standards. The duties of directors of a company include both responsibilities and tasks, and the authorities expect you to adhere to them for the good of your company’s business. The duties of a company director and your directorship responsibilities ensure things run smoothly each day. In summary, following your responsibilities and director’s duties (UK) as part of your company management will keep you in good stead going forward.

Run your company

As a director of your own UK contracting company, you manage the day-to-day running of your business and its affairs. However, you’ll have certain director’s duties and responsibilities when you run your own company. What’s more, you’re in charge of the business and its finances. In addition, as part of your UK director responsibilities, you must ensure all your legal filing responsibilities are met and are on time.

Some of our official guides

If your company ever finds itself in a position where it can’t pay its taxes, there are specific procedures to consider. 

Please read our guide, which provides tax tips for limited company contractors. It includes some great information you should know about when you’ve got your own business. Moreover, it includes our latest advice for the best tax planning ideas.

First thoughts on director duties 

What are the duties and responsibilities of company directors (UK)?

As a director, you must act lawfully and be always honest. You’ll maintain a reputation for high standards and make decisions that benefit the business and its shareholders.

Part of a company director’s responsibilities is to try and promote the success of the company. This will require general knowledge, skill, and experience, and you’ll exercise independent judgment in the best interests of the company. These actions aim to help it achieve its business goals and objectives to the benefit of its members.

UK company director’s duties (UK) and formal Companies House director responsibilities (UK) are set out in formal legislation. Indeed, these are part of the duties of directors Companies Act 2006. The Companies House directors’ responsibilities are also set out in the Memorandum of Association. Indeed, any service contract between a director and their company should also set out the duties. The Companies Act 2006 directors’ duties lay out a formal regime for UK company directors, containing seven key requirements. Therefore, you should follow these when you’ve your own UK company.

Company director duties (UK) -what are the seven key requirements? 

The seven key requirements, part of your company’s constitution, are part of the Companies House Act. These are an overview of directors’ duties and are set out as follows:

  • You must always act within your powers as the director on behalf of the company.
  • A director must act in good faith in the most likely way to promote the company’s success. Success generally means a long-term increase in the business’s value; however, it’s up to each director to decide in good faith whether taking a particular course of action is appropriate for the company. You could consider some marketing and advertising as part of promoting your company.
  • You must exercise your judgement.
  • As a director, you must exercise reasonable care, skill, and diligence.
  • You must try to avoid conflicts of interest.
  • As a director, you mustn’t accept any benefits from third parties.
  • You must declare an interest in any proposed transaction or arrangement with your company.

The Memorandum of Association contains certain official data. This document includes the details of a director’s rights, duties, and power, as authorised by the shareholders under the provisions of the Companies Act.

The Companies Act 2006 & what are director duties & the general responsibilities? 

Part one   

Some general duties apply, and they’re part of a UK director’s responsibilities and duties of a director (UK). Indeed, the duties cover a wide area and include the following:

  • Part of the duties of a company director (UK) include making decisions for the good of the company and its owners. In addition, a director’s decision-making must consider the interests of any creditors.
  • The directors are responsible for maintaining the business’s records and knowing how long to retain them. These records include the PSC (Person with Significant Control) register and your statutory records. Most importantly, you must keep business records up to date when running your own company. An HM Revenue & Customs (HMRC) review of your business records could come up at any time, and if your documents are up to date, it’s good to be ready for this.
  • A further director’s duty is to keep correct accounting records for the business. This means updating your files regularly, including all transactions, and recording them correctly.
  • Part of a director’s responsibilities (UK) is to monitor the business’s financial position.
  • A director’s responsibility also includes taking sensible steps to minimise losses if the business faces financial issues (UK).
  • Routine filing with Companies House each year is another duty of directors in a company in the UK. These Companies House directors’ duties primarily include filing two documents with Companies House each year. These documents are the annual accounts and the Confirmation Statement. If you have a contractor accountant who looks after you, they’ll usually take care of these tasks.

Part two 

Further general duties of a director include:

  • File the Corporation Tax (CT) Return (form CT600) with HMRC on time each year is another one of your director’s responsibilities (limited company). Once again, if you have an accountant, they’ll usually do this for you.
  • Pay the Corporation Tax on company profits to HMRC on time each year.
  • When the company is VAT registered, complete and file the VAT returns on time. In addition, it must also pay the VAT bills to HMRC on time.
  • When the company has a PAYE scheme, file the PAYE forms on time and pay the PAYE and NIC bills to HMRC on time.
  • A director must inform Companies House if the company’s details change during the year. These changes include the director and PSC details, registered office, company year-end, and the allotment of new share capital. Nowadays, with the internet, most of these changes can be updated online via the Companies House WebFiling service.
  • A director must only declare dividends when the company has enough profit to pay these.
  • The company secretary or a director must arrange when the Board Meetings take place. Such a meeting will consist of the Board of Directors, who will convene to discuss company business. However, smaller companies such as UK contractor companies hold an Annual General Meeting once per annum to approve the accounts, etc. They have at least one director’s meeting per annum, too, although there could be more official events during the year that require a director’s meeting.

Part three 

Some further general UK director responsibilities are contained within the Companies Act 2006 directors’ duties. These UK company director duties cover various aspects of your business and are:

  • They should engage solicitors, accountants, and auditors when required.
  • Maintain the company’s office supplies.
  • Provide the members (the shareholders and/or the guarantors) copies of the annual accounts.
  • Deal with the issue and transfer of the shares in the company.
  • If there are any employees, the business must comply with current employment law.
  • The business must adhere to any health and safety aspects.
  • They should abide by the data protection laws.
  • The director must comply with any other laws subject to the company.
  • Directors mustn’t enrich themselves to the detriment of the business.

If you have an accountant who looks after you and your business, they take care of quite a few of the tasks shown above on your behalf.

Other thoughts

Company constitution

The company’s constitution includes the Articles of Association and any resolutions and agreements made. Although not exhaustive, the Companies Act 2006 definition of ‘constitution’ refers to other documents that form part of the constitution of a company, which includes:

  • The Certificate of Incorporation and any Certificates of Incorporation on Change of Name.
  • A current Statement of Capital (or Statement of Guarantee for a company limited by guarantee).
  • Any Court Orders or Enactments that alter the company’s constitution. 

These documents are important, and the directors or secretary should keep them safe. 

What are other factors within your director’s duties? 

When considering UK company directors’ duties, a director shouldn’t automatically assume their accountant must ensure all the company’s official documents are filed correctly and on time. The director’s agreement with their accountant will set out the duties they must look after. However, the final responsibilities of directors will always lie with the director.

In theory, all accountants must carry out the work their clients ask them to do. Many of them always do so and do this very well in most cases.

Be organised as part of your director duties

If you’re an organised individual, we’ve detailed all the filing dates you may have to meet as a company director and someone who files a Self-Assessment Tax Return.

We’ve separate guides on Self-Assessment payments on account and common Self-Assessment tax errors. Making diary notes of all important dates is a good idea to help track when payments are due.

Finally, you should ensure your accountant is up to date with current working practices and how tax rules affect your industry.

Final thoughts 

In conclusion, all the duties and Companies House director responsibilities fall with you as the director. As we mentioned earlier, these cover various areas and aspects of your company. What’s more, you’re in charge, and part of your director’s duties (UK) are to ensure your company’s accounts, tax returns, and reports are correct and that you file these on time.

Finally, as a director, it’s good practice when you supply the details to your accountant; you send them promptly. If you adhere to this, you’ll give them time to complete your paperwork before any company and personal filing due dates.

Link to Contractor Advice UK group on

LinkedIn    https://www.linkedin.com/groups/4660081/

Published On: April 6th, 2024 / Categories: First timer guide, Running Your Own Company /

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