Family member as additional director

[Lance]

This is just incorrect. It's not where the main director and shareholder is, it's where management and control duties are being carried out. The problem of being the only director abroad is that it's impossible to avoid ad hoc duties needing to occur overseas, which can be enough to create PE abroad. Recent cases have been won on this; HMRC looked very closely at where contracts had been signed.

whilst some of what you say is correct for a normal business, agencies won't have it. They'll see a tax avoidance vehicle and bin you.
Agencies expect contracts to be signed by the person who'll be doing the work. Maybe not always, but in most cases, and in the current environment, you're less likely to find one.

[zerosum]

Agencies expect contracts to be signed by the person who'll be doing the work. Maybe not always, but in most cases, and in the current environment, you're less likely to find one.

Looking into this further, the point is more to avoid signing contracts in the place you become tax resident. If you're on a brief trip in some place, and need to sign a contract quickly, this should be doable (as long as the country in question doesn't have really draconian permanent establishment rules). So it may not be necessary for the other director to exercise this duty. Covid-permitting.

[Scruff]

The ultimate consideration when appointing Directors, is that they have a fiduciary duty, to the Company. Along with that, they also hold contractual capacity.

There is a significant amount of case law surrounding what Directors duties are, and how they can affect the day to day running (or not running the company).

Usually within our small Companies, it is unusual for a Director to be appointed who is not also a Shareholder.

Ultimately, it is about "intent".

I wouldn't take advice from non-paid / uninsured "advisors" on a Contractors Forum, and use this as the basis for a business changing decision.

[eek]

I wouldn't take advice from non-paid / uninsured "advisors" on a Contractors Forum, and use this as the basis for a business changing decision.

He is doing the exact opposite - Having supposedly paid for advice the OP is asking the resident posters and then insulting them.

[zerosum]

He is doing the exact opposite - Having supposedly paid for advice the OP is asking the resident posters and then insulting them.

I think you’re rather sensitive, and you wilfully mis-state my position into the bargain.

I asked what other supplementary considerations may apply that were not within the scope of my paid consultation. Lance gave an excellent example. You could not, and resorted to trying to attack the question instead.


Sent from my iPhone using Contractor UK Forum

[zerosum]

The ultimate consideration when appointing Directors, is that they have a fiduciary duty, to the Company. Along with that, they also hold contractual capacity.

There is a significant amount of case law surrounding what Directors duties are, and how they can affect the day to day running (or not running the company).

Usually within our small Companies, it is unusual for a Director to be appointed who is not also a Shareholder.

Ultimately, it is about "intent".

I wouldn't take advice from non-paid / uninsured "advisors" on a Contractors Forum, and use this as the basis for a business changing decision.

Generally agreed, but Lance and Malvolio and another pm I got made it worth enduring the irrelevant torrent of abuse and disingenuousness from the usual.


Sent from my iPhone using Contractor UK Forum

[ContractorPL]

I asked this question to my accountants once. This was when I lived in the UK so no residency issues were involved.

I was told it's better not to engage my wife as a director if she's not in position to bring the money into the company. But there was no obstacle to make her a sharehoder (though, again, I was warned not to pass more than 20% of dividends to her. If it were more, HMRC might see it as tax optimisation. They put this 20% based on some court rulings, I didn't explore it further.

I think you might as well 'just' employ your family member if he/she is in the UK (on the other hand, if she is overseas resident, this is something you absolutly must not do, as it's enough to say you LTD has overseas permanent establishment).

Happy to confirm other points raised here (by the paid advice I took) - it helps the residency if you are able to prove the company is controlled from the UK. That is not only being there for board meeting, but also carry out a full thought process about running your company/strategy. Another thing is checking if your company has a permanent establishemt in you residence country, the DTA usually provides guidance what it is.

[zerosum]

I was told it's better not to engage my wife as a director if she's not in position to bring the money into the company.

Yes, it depends on the purpose. Nevertheless, without a director in the UK, and if the only director is tax resident abroad, the company is usually caught by treaty non-residence, so it is a first mandatory level to have and then build on. If the net effect of putting such a director in place is that one ends up paying corp tax in the UK where one otherwise would not, it’s highly debatable how far HMRC are going to pursue that to give you your corp tax back and one should be more wary of the destination country.

Happy to confirm other points raised here (by the paid advice I took) - it helps the residency if you are able to prove the company is controlled from the UK. That is not only being there for board meeting, but also carry out a full thought process about running your company/strategy. Another thing is checking if your company has a permanent establishemt in you residence country, the DTA usually provides guidance what it is.

Right. The aim would be to create an AbroadCo with nothing shared with the UkCo.


Sent from my iPhone using Contractor UK Forum

[Lance]

I was told it's better not to engage my wife as a director if she's not in position to bring the money into the company. But there was no obstacle to make her a sharehoder (though, again, I was warned not to pass more than 20% of dividends to her.

My accountant advised me to make my wife a director when I was planning what would happen to the business in the event of the death of the sole director. As my wife is a shareholder that was the most appropriate way to make sure the company's affairs could be handled.
In fact to NOT make that possible would be a breach of my fiduciary responsibilities.

Your accountant was wrong IMO.

[hobnob]

My accountant advised me to make my wife a director when I was planning what would happen to the business in the event of the death of the sole director. As my wife is a shareholder that was the most appropriate way to make sure the company's affairs could be handled.
In fact to NOT make that possible would be a breach of my fiduciary responsibilities.

I looked into this a while back, when I made a will. Right now, I'm the sole director and shareholder of MyCo Ltd. When I die, someone else will inherit my shares, and they can appoint a new director.

I can see the benefit of having a "backup" director prepared in advance, but I don't think it's essential.