Readers’ forum: Unpaid possibilities

My client Mr X trades through his limited company Y Ltd and started providing consulting services to a new client Z Ltd towards the end of 2018-19. The services have been paid for by way of monthly invoices since that time.

Several months into this new arrangement in the summer of 2019 Mr X was appointed as a non-executive director of Z Ltd although this position is unpaid.

The other members of the Z Ltd board are a professional investor and the chief executive officer of the company and they both receive payment as part of their primary roles.

As a possible aside Mr X is also non-executive director of two other unrelated companies. Again both of these are unpaid roles.

My question is whether HMRC may have any grounds for arguing that the payments from Z Ltd to Y Ltd for the services of...