John Christensen ■ Directors’ duties and tax avoidance: a view from the U.S.

Directors’ duties and tax avoidance: a view from the U.S.

John Christensen

Published:

30 May 2014

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Last year we obtained a legal opinion from Farrer’s & Co which concluded that it was not possible to construe a director’s duty to maximise benefits to a company to include a positive duty to avoid tax. This opinion has helped to nail the urban myth (widely propagated by tax planners to their clients) that failure to engage actively in tax avoidance would constitute a breach of fiduciary duties.

Our attention has now been drawn to a blog by an influential U.S. lawyer noting the UK legal opinion and asking whether the same applies in the United States. The article addresses the issue of whether the business judgement rule, would inhibit directors from taking positive action to comply with prevailing tax rules or to not comply. He concludes that the BJR would do neither:

As I read the US cases, the answer is that the BJR would in fact protect either decision from judicial review.

Useful to have this view on the US position.

More here.

The author

John Christensen

Trained as a forensic auditor and economist, John has worked in many countries around the world, including a period of working in offshore financial services with Touche Ross & Co. For 11 years he was economic adviser to the government of the British Channel Island of Jersey.In 2003 he became what the Guardian has described as “the unlikely figurehead of a worldwide campaign against tax avoidance.” His research on offshore finance has been widely published in books and academic journals, and John has taken part in many films, television documentaries and radio programmes.John can be contacted on +44 (0) 7979 868302.

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