PART 2ASSESSMENT OF EARNINGS RELATED CONTRIBUTIONS
Payments to directors which are to be disregarded27
1
For the purposes of earnings-related contributions, there shall be excluded from the calculation of a person’s earnings any payment in so far as it is a payment—
a
by a company;
b
to or for the benefit of a director of that company;
c
in respect of any employed earner’s employment of that director with that company; and
d
in respect of which paragraph (2), (3) or (4) is satisfied.
2
This paragraph is satisfied if—
a
the director is a partner in a firm carrying on a profession;
b
being a director of a company is a normal incident of membership of that profession and of membership of the firm of the director;
c
the director is required by the terms of his partnership to account to his firm for the payment; and
d
the payment forms an insubstantial part of that firm’s gross returns.
3
This paragraph is satisfied if—
a
the director was appointed to that office by a company having the right to do so by virtue of its shareholding in, or an agreement with, the company making the payment;
b
by virtue of an agreement with the company that appointed him, the director is required to account for the payment to that company; and
c
the payment forms part of the profits brought into charge to corporation tax or income tax of the company that appointed the director.
4
This paragraph is satisfied if—
a
the director was appointed to that office by a company other than the company making the payment;
b
by virtue of an agreement with the company that appointed him, the director is required to account for the payment to that company;
c
the payment forms part of the profits brought into charge to corporation tax of the company that appointed the director; and
d
the company that appointed the director is not one over which—
i
the director has, or
ii
any person connected with the director has, or
iii
the director and any persons connected with him together have,
control.
5
In this regulation—
a
“company” has the meaning given by section 832(1) and (2) of the Taxes Act (interpretation of the Tax Acts);
b
“the director” means the director to or for the benefit of whom the payment referred to in paragraph (1) is made; and
c
in paragraph (4)(d)—
i
“control” has the same meaning as in section 840 of the Taxes Act,
ii
“any person connected with the director” means any of the following, namely the spouse, parent, child, son-in-law or daughter-in-law of the director.