Mark McLaughlin highlights a possible exception to the general rule that compliance with company law formalities is essential in disputes with HMRC.
Running a business through a limited company requires adherence to certain legal formalities. However, many family and owner-managed companies dispense with such formalities in some instances. Does this make their actions invalid? Not necessarily.
The Duomatic principle
If a company’s affairs have been conducted with relative informality, the principle established in the (non-tax) case Re: Duomatic Ltd (1969) 2 Ch 365 might be of some assistance to company owners.
The broad thrust of the Duomatic principle is that actions based on an informal agreement of all the shareholders with rights to attend and vote at a general meeting are as valid as if they had been based on a resolution passed formally in a
