PAYROLL INSIGHT
Act 2004 to a person aged at least 60 but not more than 64 whose gender before its issue was female and whose acquired gender is male, the periods falling before and after its issue shall be treated, for the purpose of computing liability for primary Class 1 contributions, as separate earnings periods. No comment needed, and none in the National Insurance Manual. Definitions Regulation 1(2) of the SSCR provides the definition of ‘director’ to mean: (a) in relation to a company (see below) whose affairs are managed by a board of directors or similar body, a member of that board or similar body (b) in relation to a company whose affairs are managed by a single director or similar person, that director or person (c) any person in accordance with whose directions or instructions the company’s directors as defined in (a) and (b) above are accustomed to act; and for this purpose a person is not to be treated as such a person by reason only that the directors act on advice given by him in his professional capacity.
Sub-section (c) includes a person generally known as a ‘shadow director’. Though a person might not be entitled or want to be a named director because of insolvency or commercial reasons as well as for NICs and tax motives, the final part of sub-section (c) ensures, for example, that a solicitor is not treated as a director merely because he or she is the company’s legal adviser. ...advice should be obtained if there is any doubt about treatment of such fees... What counts as a ‘company’ is not straightforward, particularly in respect of ‘director fees’ under tax law. Regulation 1 (2) of the SSCR defines ‘company’ to mean a company within the meaning of section 1 of the Companies Act 2006 (http://bit.ly/2jqv5dL) or a body corporate to which, by virtue of regulations made under section 1,043 of that Act, any provision of that Act applies. Examples
of directors of companies or bodies corporate that are not within regulation 8 of the SSCR are: building societies, which have not de-mutualised; charities, but not a trading company set up by the charity; non-British based foreign companies. Under regulation 27 of the SSCR, certain director fees received by members of professional partnerships are excluded from liability to Class 1 NICs. This is to deal with situations where companies might want, for example, their legal advisers to attend board meetings as a matter of course and accordingly a partner in the legal practice is always appointed to be a director. The definition of a ‘company’ for the purposes of regulation 27 of the SSCR is somewhat wider in scope; for example, section 1,121 of the Corporation Tax Acts 2010 defines ‘company’ as: any corporate body or unincorporated association but excluding a partnership; a co-ownership scheme (as defined by section 235A of the Financial Services and Markets Act 2000); and a local authority or a local authority association. Professional advice should be obtained if there is any doubt about treatment of such fees. n
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| Professional in Payroll, Pensions and Reward | April 2017 | Issue 29 24
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