What are the duties of a UK company director? Well, when you are a director and you have set up your own company, there are several duties that you need to follow. You will also need to keep up with these duties on an ongoing basis. Indeed, this is because when you are a director, there are certain standards that you must maintain. The duties and tasks that the authorities expect of you are for the good of your business. These are to make sure that things run each day smoothly. What’s more, if you follow these, it will keep you in good stead.
As a director, your company appoints you to manage the day to day running of your business and its affairs.
Also, you are in charge of the business and its finances. What’s more, you will need to make sure that all of your legal filing duties are met and are on time.
If in the future, you ever find yourself in a position in the future where your company cannot pay its taxes, there are certain things that you need to consider.
Have a read of my article covering tax tips for contractors for handy tips you should know when you have your own business (this is a member only article and you can read it if you sign up as a member). This includes my latest advice for best tax planning ideas.
As a director, you must act lawfully and be honest at all times. You will need to make decisions that are for the good of the business and of its shareholders.
What’s more, you must try and make sure that the business is a success. You will use your skills and your judgement to help the company achieve its business goals.
The formal duties of a UK company director are set out in the Companies Act 2006. The Memorandum of Association also sets these out. So should any service contract that is in place between a director and their company. The Companies Act 2006 lays out a formal regime for directors’ duties, and this contains seven key requirements. You should follow these when you have your own UK company.
The seven key requirements
These key requirements, which are part of the duties of a director who is running his own UK company, are set out in the Act as follows:
- You must always act within your powers as the director
- You must promote your company -you could consider marketing and advertising strategies as part of this
- As the director, you must exercise your judgement
- You must use reasonable care, skill, and diligence
- You must try to avoid any conflicts of interest
- As a director, you must not accept any benefits from third parties
- You must declare interests in any proposed transactions and arrangements with your company
The Memorandum of Association provides certain data. This document contains the details about a directors’ rights, duties, and power, as authorised by the shareholders under the provisions of the Companies Act.
Some general duties also apply and they are part of the duties of a UK company director. These cover a wide area, and they are:
- Make decisions for the good of the company and its owners. A director’s decision making will also need to bear in mind the interests of any creditors.
- Maintain the business’s records. What’s more, a director needs to have these ready for a review if and when this is required therefore, he needs to know how long to retain business records for. This includes the PSC (Person with Significant Control) register. You need to keep business records up to date at all times. A review of your business records could come up at any time. If these are up to date, you will be ready for this.
- Keep correct accounting records for the business. In turn, this means you need to update your files regularly. It also means you are to make sure that you include everything, and you enter it correctly.
- Keep an eye on the financial position of the business.
- Take any sensible steps to minimise losses if the business is facing financial issues.
- Routine filing with Companies House each year. The two primary documents to file are the annual accounts and Confirmation Statement. If you have an accountant who looks after you, they will usually take care of these tasks.
- File the Corporation Tax (CT) Return (form CT600) with HMRC on time each year. Once again, if you have an accountant, they will normally do this for you.
Further general duties of a UK company director include:
- Pay the CT on company profits to HMRC on time each year.
- When the company is VAT registered, complete, and file the VAT returns on time. Also, pay the VAT bills to the VAT office on time.
- When the company has a PAYE scheme, file the PAYE forms on time. Also, pay the PAYE and NIC bills to HMRC on time.
- A director must inform Companies House if any of the company’s details change at any time. These changes include the director details and PSC details. It will also include the registered office, the company year-end, and the allotment of new share capital. Now, with the internet, most of these changes can be sent online via the Companies House WebFiling service.
- A director must only declare dividends when there is enough profit in the company to be able to do so.
- The director must also arrange when the Director’s Meetings and the Annual General Meetings take place.
There are some further general director’s duties. These also cover various aspects of your business and are:
- They should engage solicitors, accountants, and auditors, if and when required.
- Maintain the office supplies of the company
- Provide the members (the shareholders and/or the guarantors) with copies of the annual accounts.
- Issue and/or the transfer of shares in the company.
- If there are any employees, they will need to comply with any current employment law.
- If there are any employees, they need to adhere to health and safety aspects.
- They will need to abide by the data protection laws.
- They need to comply with any other laws that are subject to the company.
- Directors must also not enrich themselves to the detriment of the business.
Please note. if you have an accountant who looks after you and your business, quite a few of the tasks show above will be taken care of by them on your behalf.
When considering the duties of a UK company director, a director should not assume that their accountant has to make sure that all of the company papers are filed right and on time. The director’s agreement with their accountant will set out the duties that they need to look after. However, the final duty will lie with the director.
You should note that accountants, in theory, have a duty to carry out the work that their client has asked them to do. What’s more many of these will always do so, and they will do this very well in most cases.
If you are an organised individual I have detailed all of the filing dates that you may need to meet as both a company director and someone who files a Self-Assessment Tax Return. I have separate guides on Self Assessment payments on account and common Self Assessment tax errors. It is a good idea to make diary notes of all important dates in order for you to track when payments are due.
Finally, you should also make sure that your accountant is up to date with current working practices.
In conclusion, the actual duties fall with you as the director. Therefore, the duties of a UK company director cover an array of areas. Indeed, you are the one who is in control of your company. Furthermore, you are in charge, and it will be you that needs to make sure that your company’s accounts, tax returns, and reports are correct. You also need to make sure that you file these on time.
What’s more, as a director, it is good practice when you supply the details that your accountant, you send them in a timely way. If you adhere to this, you will then give them the chance to complete your paperwork on time for you.
Finally, please consider these points if you are thinking of moving from an umbrella to your own company.
Link to Contractor Advice UK group on LinkedIn https://www.linkedin.com/groups/4660081/