NIM12015 - Class 1: Calculating Class 1 NICs for Directors: Directors loan accounts and payments on account of earnings: Miscellaneous

Companies Acts

The definition of director for the purposes of annual earnings periods relies on whether the director is a director of a company within the Companies Acts ( NIM12003).

The Companies Acts provisions also need to be considered more generally. As mentioned in the previous paragraph, if there is no service or other remuneration agreement a company has usually adopted Table A (Companies (Tables A-F) Regulations 1985, SI 1985/805) for remunerating directors.

The provisions of the Companies Acts are also important in other circumstances. They define what records a company has to keep, form of accounts etc. Sections 282 onwards define the qualifications, duties and responsibilities of directors (and company secretaries). Sections 311 onwards contain the prohibition of tax-free payments to directors, the need for approval by members of payments to directors for loss of office and so on. Section 320 onwards contains the provisions for approval of the transfer of non-cash assets to directors. The latter provisions are of particular importance where non-cash remuneration avoidance schemes are used because if the transfer is not legal, the argument that there is entitlement to a cash payment is strengthened.