If the Spanish based director was previously located in the UK, he should complete form P85 to advise HM Revenue and Customs of his departure from this country. As it looks as though this is a long term/permanent move, the director should break residence in the UK and a no tax code should be requested so that UK tax withholdings are no longer required. A UK tax refund will usually arise in the tax year of departure attributable to a personal allowance and basic rate tax band that have not been fully utilised.
Care should be taken if the Spanish based director will attend director meetings in the UK, as the UK Tax Authorities will not agree that such duties are incidental and therefore UK tax could be due on the associated income.
It is likely that Spanish tax and social security will need to be collected through the operation of a Spanish payroll. In addition to reviewing this payroll reporting obligation, advice should also be obtained to determine whether the Spanish based director could create a taxable presence (permanent establishment) for the UK company in Spain, with the additional tax filings and payments that this could create in Spain.
Tax breaks are sometimes available in Spain for expatriate employees and the director's entitlement to these should be checked.
The Expatriate Tax Factory (ETF) could deal with the UK side of the equation for an annual fee of around £150.
We hope this helps.