A Quick Guide for UK Company Directors

A Quick Guide for UK Company Directors It is no secret that the business world is extremely competitive. Due to this reason, those with high levels of responsibility within a company must make sure that they are up to date with all the relevant legal and financial requirements. If you are a company director and wish to have a quick reference guide at hand, this article has been written just for you.

Company Directors: Duties and Responsibilities

The duties and responsibilities of a company director can be divided into general and specific duties. General duties include the following:

  • To ensure that the company acts within the limits and scope defined in its memorandum and articles of association
  • To use your skills, knowledge, and experience to further the goals of the company, as they are outlined in the Memorandum of Association
  • To avoid taking part in activities or business opportunities where conflict of interest may arise
  • To declare any conflict on interest to the Board, as directors may not be allowed to vote on issues where an obvious conflict of interest exists
  • To avoid fraudulent actions
  • To be familiar with the statutory duties outlined by the Companies Act 2006 and to act accordingly

Specific duties include:

  • to make sure that the company's full name is visibly displayed at the business premises (unless the business is run from a private home)
  • to ensure that the companies details (including business name, address, company number, and all or none of the business directors' names) appear in all company stationery, publicity materials, and official documents
  • To prepare the company's annual accounts, or alternatively, to provide all the necessary information to an auditor so that he / she can prepare them
  • To submit the company's annual accounts to both the Companies House and HM Revenue and Customs
  • To submit a self-assessment tax return
  • To submit any VAT return if and when applicable
  • To keep accurate accounting records and any financial documents required to file the company's tax return. As a general rule of thumb, records must be kept for six years
  • To report any change of office address to the Companies House
  • To report any changes in business contacts details to HM Revenue and Customs
  • To notify the Companies House anytime changes are made to the directors' personal details, whenever new secretaries are appointed, and anytime the company's records are moved to a new location. These notifications must be carried within 14 days of the changes taking place
  • To notify the Companies House within 30 days of any shares being issued
  • To pay corporation tax
  • To ensure that national insurance and PAYE payments are met
  • To submit the employers' annual return forms
  • To hold annual shareholder meetings

Deadlines

The submission of national insurance and PAYE payments has different deadlines, depending on whether the company has agreed to pay annually or quarterly. Companies who entered the quarterly scheme must submit payment on 19th January, 19th April, 19th July, and 19th October, while the annual payment deadline is 19th April.

Corporation tax must be paid before filing the company's annual report. Companies whose taxable profits do not exceed 1.5 million are required to pay the relevant amount of corporation tax 9 months after the end of the tax accounting period. You can find further information and advice on how to pay corporation tax online at http://www.hmrc.gov.uk/ct/managing/pay-repay/index.htm

To find out more about the applicable corporation tax rates, visit http://www.hmrc.gov.uk/rates/corp.htm

Filing the Company's Annual Return

This form must be submitted to the Companies House. For more information on how to file in the forms and advice on sending the report electronically, visit https://www.gov.uk/running-a-limited-company/company-annual-return

To register for WebFiling, go to http://www.companieshouse.gov.uk/infoAndGuide/faq/webFiling.shtml

The company's tax return must be filed 12 months after the end of the last corporation tax accounting period.

Cash Matters

Company directors can receive payment in three ways: by requesting payment of a salary, by including themselves in the company's dividend payouts, or by taking a director's loan. You must keep in mind that every method of payment has different tax implications. To find out more about them and to decide which suits your needs best, you can visit http://www.company-wizard.co.uk/guides/PAYE-Dividends.aspx , https://www.gov.uk/running-a-limited-company/taking-money-out-of-a-limited-company
and http://www.hmrc.gov.uk/ct/managing/director-loan.htm

Company directors must also be aware that by selling or exchanging company assets, they may become liable to pay capital gains tax. More information on how to calculate capital gains tax is available at http://www.hmrc.gov.uk/cgt/businesses/calc-cgt.htm

If Things Go Wrong

A business can run into trouble even if the directors fulfil their duties and responsibilities. In these cases, a company director may initiate a voluntary liquidation process. The procedure for doing this is outlined at http://www.companieshouse.gov.uk/infoAndGuide/faq/liquidationInsolve.shtml

Under circumstances like liquidation or insolvency, directors may wish to resign from their position. The procedure involves signing the resignation form that can be found at http://www.companieshouse.gov.uk/forms/generalForms/TM01_termination_of_appointment_of_director.pdf and sending it to the Companies House.