HMRC internal manual

Employment Income Manual

EIM20200 - The benefits code: employment as a director: meaning of 'director'

Section 67(1) and (2) ITEPA 2003

Almost all persons employed as directors of companies are within the benefits code rules (EIM20006).

Subject to the exceptions at EIM20201 a person is in director’semployment if he:

  • manages the affairs of a company alone, or is a member of a board of directors or similar body which does so, or
  • is a member of a company whose affairs are managed by its members, or
  • is a person in accordance with whose direction or instructions the directors of a company are accustomed to act. Such people are commonly known as ‘shadow directors’ and for the purposes of tax on employment income (EIM00510) on benefits provided to them are treated as holding an office or employment with the company. In the case of Regina v Allen (74TC263), the House of Lords supported the Inland Revenue’s view that there is no distinction between directors and shadow directors. This rule does not apply where the directors act on advice given by the person only in a professional capacity, for example, as a solicitor or accountant.

‘Company’ includes an unincorporated association such as a society or club.