Becoming a director of a UK limited company brings both opportunity and responsibility.

Directors are entrusted with the management of the company’s affairs and must act in its best interest while adhering to a number of legal requirements. Failure to do so can lead to personal liability, fines, and even disqualification. 

Here are 5 of the main responsibilities as determined by the UK government.

1. Filing of accounts and tax returns

A company director must ensure the company meets its tax obligations. According to HMRC, directors are responsible for:

• Registering the company for Corporation Tax 
• Filing Corporation Tax returns 
• Maintaining accurate financial records 
• Managing VAT obligations
• Operating PAYE (Pay As You Earn)
• Filing Self-Assessment tax returns

Non-compliance with these HMRC obligations can result in fines, penalties, and interest, making this one of the most critical areas for a director to manage.

In addition to tax returns, directors must ensure that certain statutory documents are filed with Companies House, including:

• Annual Confirmation Statement
• Annual Accounts.
• Changes in company details

These filings keep the company’s information up-to-date and in compliance with UK law. Missing deadlines or filing incorrect information can lead to penalties and legal issues.Here are the five most common accounting mistakes made by small business owners, with a solution and a helpful tip for further reading.

2. Keeping Proper Accounting Records

Directors must ensure that the company maintains proper accounting records, as required by the Companies Act 2006. These records must clearly show and explain the company’s financial position, including details of income, expenses, assets, and liabilities.

Good record-keeping is essential not only for tax purposes but also for business decision-making. The company’s financial records must be kept for at least six years, and failure to maintain accurate records can result in fines and other penalties.

A good bookkeeper can help maintain your accounts. Read our blog on The ABCs of Bookkeeping here.

3. Compliance with the Company’s Constitution

Each limited company has a set of governing documents, the most important being the Articles of Association. These outline how the company is run and what powers it’s directors have. It is the director's duty to ensure that they act within the powers granted by the company’s constitution and follow the rules laid out in these documents.

This also includes any agreements made with shareholders or third parties, such as shareholders’ agreements.

Failing to exercise due care could expose directors to liability if the company suffers as a result of poor decisions or negligence.

4. Avoid Conflicts of Interest

Directors must avoid conflicts of interest and always prioritise the company’s interests over their own personal or financial interests. This includes not using company opportunities for personal gain and disclosing any potential conflicts or benefits to the board.

For instance, if a director has a personal or financial interest in a contract being considered by the company, they must declare this interest and avoid voting on the matter.

5. Duty to Exercise Reasonable Care, Skill, and Diligence

Directors must perform their duties with the level of care, professionalism, and diligence expected from a reasonable person in the same position. If a director has specific expertise, they are expected to apply this expertise to their role. This means directors must be informed about the company’s business, financial position, and market environment to make well-considered decisions.

Failing to exercise due care could expose directors to liability if the company suffers as a result of poor decisions or negligence.

Stay compliant

At the core of a director’s responsibilities is the duty to promote the success of the company. This means acting in good faith and making decisions that benefit the company and its shareholders. Directors must consider the long-term consequences of their actions, including the impact on employees, suppliers, customers, and the wider community.

When making decisions, directors should always act in the company’s best interests, not their own. This responsibility also extends to ensuring fair treatment of all shareholders.

Staying informed and seeking professional advice when necessary is key to fulfilling these duties effectively and protecting both the company and the directors themselves.

If you're considering becoming a director or currently serve as one, it’s essential to stay on top of these responsibilities to ensure the company's long-term success and avoid legal pitfalls.

If you need help managing your responsibilities, keeping records, filing accounts or even paying your tax please get in touch - we are here to help you get the business you want!