Do companies have a duty to avoid taxes?

Here’s a transaction that did the rounds some years ago.

If I wanted some foreign exchange in the future I could enter into a contract with a bank by which it would sell me some. Assume that, in order to get a bank to promise to give me $2bn in twelve months, I had to promise to give it £1.5bn in twelve months.

But here was the trick.

What about if, instead, I agreed to pay the bank £300m now and the other £1.2bn twelve months down the line in return for that $2bn. The bank would be pleased because it would get that £300m now. And I would be pleased too. Because I would – or at least this is what folks were told – get to treat that £300m as wiping out £300m of taxable profits. I would (assuming a 20% tax rate) be £60m better off for doing nothing. I might want that £60m enough that I’d buy $2bn of foreign exchange even if I had no need for it. And some did.

I tell you this story because of what Boris Johnson wrote in the Telegraph yesterday. He said this:

“It is absurd to blame the company for “not paying their taxes”. You might as well blame a shark for eating seals. It is the nature of the beast; and not only is it the nature of the beast – it is the law. It is the fiduciary duty of their finance directors to minimise tax exposure. They have a legal obligation to their shareholders.”

But it’s not true, of course. Not remotely. It’s completely baseless. Boris Johnson can’t point to a single authority for that proposition – because there isn’t one.

A director’s duties are to promote the success of the Company. You can see that yourself here in the Companies Act. The Act says – and I’m quoting it – that directors must have regard to the following factors in particular:

“(a)        the likely consequences of any decision in the long term,

(b)          the interests of the company’s employees,

(c)           the need to foster the company’s business relationships with suppliers, customers and others,

(d)          the impact of the company’s operations on the community and the environment,

(e)          the desirability of the company maintaining a reputation for high standards of business conduct, and

(f)           the need to act fairly as between members of the company.”

There’s nothing at all in the Companies Act about a duty to minimise your tax bill. And I’ve highlighted the bits that are flatly inconsistent with it. It’s like asserting that the duty to consider the environment imposes an obligation on John Lewis to deliver sofas by horse and cart. Worse, in fact, because although it mentions the environment the Companies Act is silent on the subject of tax avoidance. True, you would be in breach if you ignored tax – although the language above suggests it’s not in the first tier of matters to which you should have regard. But that’s an age away from the proposition that directors have a positive mandatory legal obligation to seek out opportunities to minimise tax.

The words of the Act mean what they say. But if they aren’t clear enough for you, here’s a legal opinion and here’s some further analysis. But you don’t need them.

Why does this matter? If The Staggers ran a detailed rebuttal every time a politician got it wrong you’d soon stop reading The Staggers. Why did I describe it yesterday as “extraordinarily irresponsible”? And “encouraging abusive tax behaviour”?

This is why.

The words uttered by a senior politician – the Mayor of London and likely future Prime Minister – carry weight. People listen. Directors will consider themselves obliged to seek out tax avoidance schemes.

And tax avoidance schemes are bad for society.

But you don’t need to take my word for that. Here’s what the Financial Secretary to the Treasury, David Gauke said:

“While we want a tax system that is competitive for businesses, we also want a tax system where businesses pay their taxes. It is clear that attitudes to aggressive tax planning are changing – and that the public, investors and stakeholders now expect higher standards of tax compliance and more transparency from large businesses about the way they approach taxation.”

The behaviour that Gauke is talking about is perfectly legal, if aggressive, tax planning. He’s explicitly saying that businesses should not do that which Boris Johnson says they are obliged to.

So it’s bad for society and it’s also often bad for business.

That scheme I mentioned at the start?

It failed. Leading QCs advised it worked. It was entered into by Blue Chip companies. It was sold by one of the Big Four firms of accountants. It looked as good as a tax scheme can look. And it failed.

And the companies who entered into it lost the substantial fees they paid to the promoter and their advisers, they suffered the cost and distraction of litigating the matter through the courts, they suffered reputational damage, they were exposed to interest rate liabilities and the risk of penalties and they suffered the economic cost (in some cases) of being lumped with huge amounts of foreign exchange they didn’t want.

You see, these schemes can fail. And do fail – HMRC claim to win 80% of all tax avoidance disputes. And very often businesses are driven into bankruptcy by the consequences of this failure.

So Johnson is wrong. He’s telling businesses they must act contrary to the signals sent by the rest of Government; in ways that damage civil society; and, very often, directly damage business too.

But he also damages the relationship between business and society.

Businesses aren’t “sharks”. They are not hard-wired to sniff out and exploit weaknesses in broader society. There is no need to excuse moral recidivism. Public confidence in business – low since 2008, and not only on the left – isn’t nurtured with blind celebration. What we need instead is a defence that celebrates what business can enable. But also that searches out the ways in which business can better deliver on the only metric that matters: the health of our society.

Starting with, to borrow Osborne’s words on Friday, paying their fair share of taxes.

35 thoughts on “Do companies have a duty to avoid taxes?

  1. “Have regard to”, yes.

    But you missed out the bit at the beginning of s.172 which says “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole”. That is, in terms, he must act to maximise shareholder value. A company paying more tax than is legally due is rarely in a shareholder’s best interests, although (as that list for factors suggests) it is not a simple mathematical exercise.

    So, as Boris says, directors *do* have a fiduciary duty to shareholders, but that duty does not mean minimising tax above all other considerations.

  2. I haven’t missed it out. I’ve stated it. And just asserting that it’s not in the shareholders’ interests to avoid abusive tax schemes is mere assertion, wrong or often wrong assertion at that (as my example makes clear), and ignores the factors a director is explicitly obliged to take into account.

  3. Ahat is the case and scheme you are referrring to please?

  4. I completely agree that directors do not have an obligation to avoid tax, neither do they have an obligation to desist from tax avoidance.

    The potential impact of tax avoidance on shareholders’ interests (eg: in terms of the likelihood & impact of reputational damage to the business) will vary from company to company. It follows that in some circumstances it will be definitely be contrary to the directors’ duty to promote the success of the company to the members as a whole, but will it apply to every situation? -I’m not convinced.

    There is an unanswered question in my mind:

    There is a primary duty to promote the success of the company for the members. To what extent does the impact of the company’s operations on the community have to be taken into account? Does it really extend to tax avoidance?

    By the way, I am totally against abusive tax avoidance – I’m simply not convinced that the law is 100% clearcut.

  5. To continue the comments I bothered you with on Twitter yesterday…

    As Andrew says, there very clearly *is* a duty to minimise tax, subject to important qualification. The provisions you have highlighted aren’t necessarily inconsistent with this duty, and even in cases where they are it is not necessarily the duty of a director to prioritise (say) the impact on the community over the duty to maximise profit. This is a matter of judgement for individual directors.

    And whilst I agree that Boris is, by omission, reading things into the Act that aren’t there, I think you are doing the same. There is nothing in the Act about morality, and even if there were, morality is a matter of individual conscience. There is nothing in the Act that tells me as a director that I have to conduct my affairs in a way that is moral according to the definition of some self-righteous bleeding-heart lefty lawyer writing in the New Stalinist. (I stress that this is not my view, but I’d conjecture that you might find it in the odd boardroom).

    Ultimately you are right of course: abusive tax avoidance is clearly inconsistent with the duties of a director. The question is just what we mean by ‘abusive’. Boris is wrong by omission, and in a way that is much more damaging, because this belief, and ignorance of what the Act actually says, is astonishingly prevalent among company directors.

  6. I’m reminded of the quote at the beginning of Bennion’s Statutory Interpretation:
    ‘The Lloyd’s people were amazed when I pointed out it was illegal to use their clients’ money for their own investments. They asked where it said that in the Act of Parliament… . Ian Hay Davison said “It’s not in the Act; it’s in the ten commandments.’

  7. @David Lewis I think the law is deliberately not 100% clear cut. It is designed to leave a lot to the judgement of directors. It is significant for instance that the phrase ‘benefit of members’ is not ‘financial benefit of members’.

  8. Boris’ statement and the various opinions cannot have come from nowhere. At some time under an earlier Companies Act or under precedent or professional guidance there must have been statements that it is a fiduciary duty of a company director to minimise the tax payable as part of his role in protecting the interests of shareholders. Hence, there should be “precedent” for Boris’ statement in caselaw or a statute that has since been revoked. So where is it?

    It used to be the case that a husband could lawfully beat his wife so long at the stick used was no thicker than his thumb.
    Today that is no longer the law – and nobody today could cite the old cases as a valid defence. So what this the source of Boris’ misstatement?

  9. Jolyon. You say “There’s nothing at all in the Companies Act about a duty to minimise your tax bill.” I assume you mean nothing explicit. As Andrew says above, the first sentence of s172 does mean a duty to minimise tax, where doing so won’t fall foul of the specific duties. For example a duty to claim capital allowances, explicitly allowed by law.
    To that extent Boris is right.
    The issue is how far should directors go to minimise tax by using legal avoidance techniques? Legally this would appear to be as far as possible, only constrained by taking specific s172 duties into account. In practice that usually means using legal avoidance.
    So Boris is fundamentally, if not completely, correct. Companies (their directors) do have a fundamental duty to minimise their tax bill and therefore avoid taxes legally within the wider duty constraints above.
    If we don’t like the consequences in specific situations, we have to change the law.
    Until then, we can only take a moral stand, and shame aggressive avoiders into paying for PR purposes.

  10. Um, I didn’t say there was a duty to minimise tax: just that financial (including tax) consquences will be an important, but not overriding factor, in any decision by a director.

    By “missed out” I simply meant that you had quoted the factors to which regard must be had, but did not quote the bit immediately before that which says what that regard is in relation to; that is, the primary duty to promote the success of the company for the benefit of its members. (Which is in addition to other duties under statute, common law and in equity, such as exercising reasonable skill and care, exercising independent judgment, acting within their powers, avoiding conflicts of interest, etc.)

    David Quentin’s blog leads to a very good and balanced comment by Allen & Overy –—No-kidding.aspx: “Some tax planning will be likely to promote the success of the company. Some may go too far and be outweighed by other considerations. And it is up to the directors of a company to decide where to draw the line in relation to the company’s specific circumstances. … So long as directors give all relevant factors proper consideration when making decisions about tax planning, and provided they can justify the decisions that they make, they should not incur liability for breach of their duties.”

    As that indicates, a director will rarely be in breach of their duties in deciding that to do something to reduce the incidence of tax on their company, just as much as they will rarely be in breach of their duties in declining to do so for another good reason. But there is still a duty to do what the director reasonably can to advance the short-term and long-term interests of the company’s shareholders, and the financial consequences of an action (or inaction), including tax, are obviously factors that any director must take into account.

    In short, Boris overstated the position – there is a duty, but it is not as black-and-white as he said.

  11. No one is suggesting otherwise than that directors are derelict in their duties if they don’t pro-purposively claim tax reliefs. But it’s a million miles from that proposition to Boris defending Apple and Google’s abusive arrangements on the basis that directors are mandated by their fiduciary obligations to effect them.

  12. Jolyon, what would be the position where a company enters into an abusive tax arrangement, where (say) due to the company’s low profile and/or the nature of its business any reputational damage would be minimal?

    Could the answer differ between situations where the savings are distributed as dividends and where the savings are reinvested to grow the business which would benefit the community?

    I don’t know the answer, but can’t help thinking that this area can be quite nuanced?

  13. Unfortunately a lot of this is highly subjective and value ridden. For instance, the definition of what is an “abusive” use of the tax regime. If “abusive” tax avoidance is wrong, then the law should be written to define what that means and measures taken to deal with it. If necessary, that would mean disqualifying directors or other sanctions.

    When it comes down to issues of law and accountancy, then vague issues of fairness or society’s interests are often very much in the eye of the beholder. Some will claim that minimising tax liabilities benefits society through a more vibrant economy whilst voluntarily paying higher level of tax reduces employment, investment and returns to investors. It’s far too much in the eye of the beholder. The issues of what might be seen as in the interests of society or not are therefore very much open to judgement, personal principles, fairness and so on.

    Those lines introduced into the Companies Act that you underline are among the worst sort of parliamentary gesture politics as they are pretty near unenforceable. Are we going to see directors disqualified because they have failed in their duty to give due consideration to “the impact of the company’s operations on the community and the environment”. What the hell does that mean in practice, and who will be the judge of it? If it isn’t enforced by some sanctions, then what is the point?

    What should surely happen is that politicians and the authorities should work to produce tax regimes that are fairer (in there terms) and enforceable in law, not resort to gesture politics and easy moralising. Company’s are not human beings, and they are not best handled using tactics of shaming.

    As a final (and very significant point), the Company’s Act is very much a UK piece of legislation, so what on earth has it to do with the duties of the directors of companies incorporated in (say) the USA? Yes, any subsidiaries that they have must operate in accordance with UK law, but using company director’s duties as defined in the UK as, somehow, defining what the board’s responsibilities are in foreign companies (and their international tax arrangements) is irrelevant.

    None of this means, of course, that morality and principles don’t play a part in taxation policy. However, what I do say is it’s the role of legislators and regulators to embody this policy in workable laws, not use subjective terms such as “fairness” which are wide open to interpretation.

  14. Jolyon, I agree with your comment made at 11.10hrs. But I don’t agree with the main article that minimising tax is “completely baseless” for the reasons given above. The only issue at stake is duties in respect of aggressive avoidance.

    David Lewis’s question is fascinating, where the community could benefit. Even large companies use this argument, espeially in creating jobs that would not otherwise exist (and on which VAT, PAYE etc is paid in tax).

  15. A few points. Your question assumes that it is a purely a long term financial assessment. I disagree with that assumption. But even if I assume I agree with it there are risks beyond reputational ones: see the para beginning “And the companies…”

  16. That was one particular situation – I do agree that ALL associated risks need to be thought through. There could well be abusive avoidance situations where the upside gains vastly outweigh the downside risks.

  17. Steve Jones is right, including that directors’s duties will differ from country to country. But let’s put differences in directors’ duties and tax law aside for a moment. Let’s be devil’s advocate…
    What if Google was UK-owned and selling in US? If the delivery mechanism for the ads had been developed here in the UK, wouldn’t we Brits be arguing for more of the US revenue to be taxed in UK, by charging the US business for using the system’s functionailty? The taxable profit in US might then only reflect value added by the US salesforce, at a much lower % of revenue than for global group .
    If that is the sort of argument Google has advanced to HMRC, as appears to be the case from Google’s press release, is that really abusive?
    I don’t have the full facts to judge.

  18. There’s some case law in Delaware (unfootnoted below; footnoted here Thanks to Max Schofield:

    “The Plaintiff appears to contend that there is an independent duty to minimize taxes, or alternatively that the failure to minimize taxes is per se a waste of corporate assets. The Plaintiff, however, does not point to any Delaware jurisprudence for this position; instead, the Plaintiff presents a smattering of inapposite cases from various other jurisdictions which I find logically unpersuasive.

    This Court has concluded that “there is no general fiduciary duty to minimize taxes.” There are a variety of reasons why a company may choose or not choose to take advantage of certain tax savings, and generally a company’s tax policy “typif[ies] an area of corporate decision-making best left to management’s business judgment, so long as it is exercised in an appropriate fashion.” I am not foreclosing the theoretical possibility that under certain circumstances overpayment of taxes might be the result of a breach of a fiduciary duty. I am simply noting that a decision to pursue or forgo tax savings is generally a business decision for the board of directors. Accordingly, despite the Plaintiff’s contentions, Delaware law is clear that there is no separate duty to minimize taxes, and a failure to do so is not automatically a waste of corporate assets.”

  19. There is a more important issue, taking the macro view.

    The taxation of digital services would be less of an issue if UK had large businesses providing services globally (and being taxed here) to better balance with US businesses providing services in UK (who aren’t paying much tax here).

    Why is it that all the big companies are US-based and founded – Google, Apple, Microsoft, Facebook etc etc?

    Why haven’t UK (and indeed European) digital businesses flourished? As the world becomes increasingly technological, we ignore this issue at our peril.

  20. It has been pointed out to me on Twitter that this blog item is only about the responsibility of the directors of UK companies. Unfortunately Boris’s Telegraph article examples (including that headlined) only seems to be about US incorporated multi-nations.

  21. When you said this:

    “It is exactly that simple. Directors have no legal obligation to minimise their tax obligations”.

    I was rather surprised, because it seems to me to imply that directors would not be “derelict in their duties if they don’t pro-purposively claim tax reliefs”.

    Strangely Boris’s statement (“it is the fiduciary duty of… finance directors to minimise tax exposure”) is factually more accurate than yours (“directors have no legal obligation to minimise their tax obligations”) while simultaneously being more misleading.

  22. I’m going to say this once more, only. The fact that (a) directors cannot ignore tax does not have as its consequence (b) that they have a positive legal obligation to minimise it. I said (a) and Boris said (b) and Boris is wrong to say it.

  23. Directors *do* have a positive legal obligation to minimise tax. The fact that it is subject to important qualifications does not mean that it doesn’t exist. Boris’s statement is factually correct, but misleading because it omits the qualifications.

  24. Relevantly, see William Underhill in Tax Journal, 27 September 2013, Issue 1186, p.9 –

    “Directors who take a course of action which produces a worse tax result than an alternative course of action would not be open to criticism if there were good non-tax reasons for reaching their decision but might be exposed if they did so in circumstances where there were not.”

    “… Does it mean that directors must pursue every available opportunity to save every penny or cent of tax? No-one would advance such an absurd proposition. The opposite proposition, that UK company directors have no fiduciary duty to their shareholders to avoid tax is no more defensible. The truth lies in between.”

    And then “… The real answer is that sometimes their duty to promote the success of the company will drive decisions to take the lower tax course of action. … Boards should consider carefully and in detail their attitude to tax and its avoidance (or minimisation, if that is a better word) and be ready to justify their decisions, not on the basis that they are forced by their duties to take them but because they believe they are in the best interests of the company.”

    That is, once they have satisfied their legal duties, and taken a legal course of action, they need to justify the decision they have taken in the court of public opinion, and suffer the public relations consequences.

  25. How about minimise tax exposure to the extent that it’s compatible with the other responsibilities of a director. That being implicit in the director’s responsibility to act in the best interests of shareholders.

    There seems to me that the wording of the Company’s act in these areas leaves an enormous amount of discretion to the directors in the way that they execute their judgement. Should a director not use appropriate tax planning they might reasonably well incur the displeasure of their major shareholders. The question then comes as to where the boundary of that tax planning might be.

  26. More or less what I said.

    I love how people think that the process of sending something to the printers somehow inculcates in that thing a sense of authority that it lacked when it was mere words on a screen. Like mine.

  27. As to your first para, I wouldn’t even agree with that.

    Unless you work in the field it is difficult to grasp quite how tricky it is to evaluate the likely consequences of a pitch from professional advisers as to how you might reduce your tax bill. So I would put your duty more generally. I would say, as a director you have a responsibility to balance your appetite for improving your post tax profits against, first, your desire to maximise your pre-tax profits and, second, the other considerations the Companies Act directs you to have regard to.

    Hope that helps.

  28. A lot of what happens in the “real world” is about incentives. Directors with incentives based on say after tax earnings will do whatever they can (mostly legally) to increase those earnings e.g. increase revenue and defer or decrease costs and taxes.This applies particularly to public companies.
    The director of a private owner-managed company is often incentivised to defer revenue and maximise costs so that he pays less tax which is a cash cost.He can retain value and cash in his company.
    We have auditors and accounting standards to regulate this.
    How successful they are is another matter.
    I think Boris was commenting on human nature as much as the law.

  29. David, your comment coincides with the recent relaxation of the audit exemption regulations, so even more companies won’t require an audit. While all statutory accounts are still required to show a true and fair view – the relaxation will do nothing to encourage compliance – incidentally some of the techniques you describe might cross the boundary of avoidance to become evasion.

  30. “I would say, as a director you have a responsibility to balance your appetite for improving your post tax profits against, first, your desire to maximise your pre-tax profits and, second, the other considerations the Companies Act directs you to have regard to.”

    Which, of course, is highly subjective as to where we draw that boundary. I tend to thing that if we have to start relying on where individuals draw such balance points, that there’s something rather broken. There are places for fine moral judgements, but I’m not sure the day-to-day application of tax policies is one of them. I’m sure Adam Smith would not have approved.

  31. In answer to the original question “Do companies have a duty to minimise taxes”, there are two camps, represented by:
    (1) Jolyon saying at 1.57 yestersay 28th “The fact that (a) directors cannot ignore tax does not have as its consequence (b) that they have a positive legal obligation to minimise it.”
    (2) Steve at 2.05 yesterday saying “Directors *do* have a positive legal obligation to minimise tax. The fact that it is subject to important qualifications does not mean that it doesn’t exist. Boris’s statement is factually correct, but misleading because it omits the qualifications.”

    So which is correct?

    Let’s look at the opinion paper produced by Farrer &Co, linked in the original post above: This is a fine academic work, but seems out of touch with real life, as I’ll explain.

    On page 2, referring to the core duty of UK directors in the first sentence of s172 of CA2006, the document says “It is not possible to construe a director’s statutory obligation to promote the success of the company as a positive duty to avoid tax.” It goes on to say “…a duty to maximise profits … by reference to after-tax profits, distributable profits or some such. In fact, however, such a duty is unknown in English law in any event.”. I presume that means no further statute and no applicable UK case law (the case above being from Delaware under different law)

    Why no UK case law? Maybe because no case would succeed. Or maybe because court action would be a last resort, the director has minimal funds, or possibly settled out of court with the director’s insurers. We don’t know.

    So let’s consider what would happen if a case on the duty to minimise tax were to get to court. There would be no jury, but imagine there was. What would Joe Public conclude? Arguments might include:

    (a) In general, is there any duty to pay tax? Yes where legally obliged.

    (b) Is there any general duty to pay any more tax than legally obliged? Not that I’m aware.

    (c) Is there any other obligation or moral case to pay any more tax than legally obliged? What if a householder is offered two quotes for some work, one £100 plus £20 VAT, the other from a small unregistered trader at £100 no VAT? All other things being equal  I’d imagine well over 90% would opt to save the VAT. Even more if it were £200 or £2000 in VAT. So no, there’s no fundamental obligation or moral case to pay more tax.

    (d) Do large companies have any greater obligation to pay more tax than legally obliged? Corporates will often fund sports facilities for their workers, and other facilities in the local communities. But this is primarily for business benefit, reflect the (a) to (f) duties in S172, no obligation. At the national level the same principles apply. There’s no outright obligation to pay more tax.

    (e) Steve also said at 4.59 yesterday “Should a director not use appropriate tax planning they might reasonably well incur the displeasure of their major shareholders” As that is typical shareholder expectation, then  in reality there is a fundamental duty to shareholders to minimise tax, including corporation tax, subject to other business considerations.

    (f) It would be no different in a small family business. If I were to tell my wife we could legally save £5000 tax a year by arranging the business in a different way, maybe at an admin cost of £500 a year, she’d expect me to do it. Or my dinner would be in the dog (she’s a better cook than me). Just like VAT I would expect well over 90% of other people placed in that situation to think the same. It’s effectively a family duty.

    So I believe Joe Public would conclude there is a primary duty under s172 to minimise tax, from small businesses to mega-corporates alike. This is nonetheless tempered by PR and other considerations reflected in the specific duties listed in s172. I would vote for Steve.

    But I can also agree with Jolyon when he says “So I would put your duty more generally. I would say, as a director you have a responsibility to balance your appetite for improving your post tax profits against, first, your desire to maximise your pre-tax profits and, second, the other considerations the Companies Act directs you to have regard to.” Not quite saying there’s a primary duty to minimise tax. But oh so close.

  32. Another instructive line in that document is the following:

    “the duty is merely to act in a way that the director “considers” would be “most likely to” promote the success of the company. In other words it is a subjective test and it is concerned with the success of the company as an aim on the part of the director rather than as a result for the company.”

    What this means is that in reality there is no positive duty on the part of a director to do anything. Such positive duties as the Act establishes are expressed vaguely, and in such a way that no director ever need worry about being sanctioned for breaching them. As far as I’m aware, on the rare occasions when directors are sanctioned for breach of duties it is generally for fairly egregious breaches of negative duties: selling company property to yourself at an undervalue, for instance.

    If this is the argument, then I would absolutely concede that there is no duty to minimise tax, or in fact do anything specific at all.

    If, however, you accept that ‘promoting the success of the company for the benefit of the members’ would normally, other things being equal, entail maximising profit, then you would expect that a director acting in good faith would consider this part of his or her duties. And if maximising profit is part of your duties, then minimising tax is part of your duties. Other things being equal.

  33. It is the end of your point (e) that is the crux: in most cases, a director’s duty to promote the success of the company is broadly synonymous with improving its financial position, which can include a duty to reduce the company’s outgoings, including tax, where reasonably possible, but subject to other business considerations. No, there is no strict legal duty to minimise tax, but there is a duty to take tax into account.

    Just to throw into the mix that we are (and Boris was) talking about the duties of directors, not the duties of companies. To answer the headline question, a company does not have a duty to minimise taxes, any more than an individual does. That said, surprisingly few people go out of their way to pay more tax than they must, and most will take some steps that result in them paying less tax than they would do otherwise.

    Then, strictly speaking, a director’s duties are owed to the company, not to the shareholders (see the beginning of section 170), although the shareholders may be able to enforce the directors’ duties through a derivative action.

  34. In response to point (e) I would just say that if you feel that your duties as a director are in conflict with the wishes of your main shareholders then you have to ignore your shareholders. Particularly if there is a risk of insolvency.

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