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UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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is it legal for a company to contract legal services/advice

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is it legal for a company to contract legal services/advice from a non-executive director of the same company and reimburse that person through gifted free air flights paid for by the company's credit card points, thus avoiding any tax and NI contributions on both sides?
-Could you explain your situation a little more?
Customer: replied 3 years ago.

at this stage I can not give any more details than those already divulged. What other information, specifically, do you require?

Okay, noted.

I wanted to know how much the director was paid in kind and whether he is a qualified lawyer.

Be that as it may, under S. 175 of the Companies Act 2006, A director of a company must avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company.
(2)This applies in particular to the exploitation of any property, information or opportunity (and it is immaterial whether the company could take advantage of the property, information or opportunity).
(3)This duty does not apply to a conflict of interest arising in relation to a transaction or arrangement with the company.
(4)This duty is not infringed—
(a)if the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or
(b)if the matter has been authorised by the directors.
(5)Authorisation may be given by the directors—
(a)where the company is a private company and nothing in the company's constitution invalidates such authorisation, by the matter being proposed to and authorised by the directors; or
(b)where the company is a public company and its constitution includes provision enabling the directors to authorise the matter, by the matter being proposed to and authorised by them in accordance with the constitution.
(6)The authorisation is effective only if—
(a)any requirement as to the quorum at the meeting at which the matter is considered is met without counting the director in question or any other interested director, and
(b)the matter was agreed to without their voting or would have been agreed to if their votes had not been counted.
(7)Any reference in this section to a conflict of interest includes a conflict of interest and duty and a conflict of duties.

So, if the arrangement was approved by the board, it is legal/lawful.

However, there may be tax implications with the gifting of the credit card point miles to buy tickets for the director.

Hope this helps
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