An induction policy for new directors

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Jennifer Adams explains why every company should have an induction process when a new director joins the team, what that process should comprise and gives advice on the contents of an induction 'pack'.

The vast majority of companies registered with Companies House started life as one-director companies and will remain so until the demise of either the director or the company itself.

When such a director does invite another to join, the role of the company’s accountant is to advise where necessary, mindful of the duty of care required not least in advising the parties involved of their legal responsibilities.

Many company directors have no understanding as to what being a director actually entails or of the consequences of getting it wrong. Educating newly appointed directors in such matters was the reasoning behind the main principle of section B4 of the UK Corporate Governance Code 2010 which states that “All directors should receive induction on joining the Board and should regularly update and refresh their skills and knowledge.” The Code was written for listed companies but the idea of an “induction” is valid for the smaller non-listed company even those with only one or two directors. An accountant can help in the induction process as he will invariably have the background knowledge required both of the history of the company and of company law.

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  • Why have an induction
  • What comprises a programme
  • The induction 'pack'

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About Jennifer Adams

Jennifer Adams is Consulting Editor of AccountingWEB and is a professional business author specialising in corporate governance and taxation. She runs her own accounting and consultancy business with offices based in Surrey and Dorset.


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By staceyl
09th Aug 2012 11:50


The directors should also be informed that they need to register for self assessment!

Thanks (0)
09th Aug 2012 10:32

Should they?

I don't think there is any legal requirement for a director to complete an SA return - unless they fall within the requirements re income (or untaxed sources etc)

Thanks (1)
By staceyl
to dwyane
09th Aug 2012 11:49

Yes they should

Thanks (0)
09th Aug 2012 11:07

Re self assessment - see previous article on this

This was covered in my article of about 6 weeks ago - 27th June as per link below - 

The text states:  

Any office holder (to include non-executive directors) should be subject to PAYE whatever the amount of income received (even £NIL)

I was thinking that whether he was registered or not would be something that he would be asked verbally rather than something to put in an 'induction pack' and if he was working for the company then it would already be known but yes, at some time it should be confirmed.

Thanks (0)
09th Aug 2012 12:19

If you can find me the legislation

that states that a director of a company must complete a tax return then I will quite happily accept your stance.  



Thanks (0)
09th Aug 2012 15:43

Read the P11D article


As the P11D article states...

ITEPA 2003 s 5 which states that ‘ the provisions of ... employment income ... that are expressed to apply to employments apply equally to offices unless otherwise states’ 

>>> it doesnt say you have to complete a Tax return - just that you need to register for self assessment.

This is a topic that comes up time after time on 'Any Answers' and has been dealt with in the P11D article.


Thanks (0)
09th Aug 2012 12:58


perhaps i have missed the point....registering for SA is as far as i can make out effectively requesting to have a tax return issued...?!!?  (the big give away being on page 2 of the SA1 - 'why do you need to complete a tax return?', followed by the various options).


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By staceyl
10th Aug 2012 10:55
Thanks (0)
10th Aug 2012 11:15

That's not legislation

staceyl wrote:


This is simply HMRC's take on the subject. They are not yet able to create law on their own although they are of course a law onto themselves which is another story.




Thanks (1)
10th Aug 2012 11:58

Like I said Stacey
Show me the legislation and I will quite happily accept your response. But let's be clear as roland195 points out, the revenues view is exactly that...their view...not legislation.

Thanks (1)