Share this content

Fees paid to non executive directors/related parties

Fees paid to non executive directors/related...

I have a medium sized, privately owned company who have two non executive directors. These non exs consult with the company and raise a consultancy fee for the work done on an intermittent basis.They are not on the payroll and offer their services to other companies. The transactions are below materiality. Do these transactions have to be disclosed on the directors report and notes re related parties?, all the advice I have seen relates to public listed companies and not medium sized private companies.


Please login or register to join the discussion.

26th Feb 2013 12:34

Just to deal with the matter of the payroll, would not the Non-exec Directors (NED's) be office holders and as such, (under S5 ITEPA) any income received be deemed employment income and should be taxed under PAYE accordingly?

S 5 ITEPA   ----   Application to offices and office-holders

(1)The provisions of the employment income Parts that are expressed to apply to employments apply equally to offices, unless otherwise indicated.

I do not believe "materiality" will have any effect on this principle

The fact that other fees are being received from other Companies is not, I believe, relevant.

One possible exception is where ESC A37 can apply. This is where an NED is part of a professional Partnership and those fees are included in the income of the Partnership (not any sole trader/consultant!). The P/ship should request of HMRC for the concession to apply; HMRC (if accepted) then issue a NT coding to the Company. I do not believe one can merely assume it will apply.

It is not unknown for HMRC to accept that, where the fees are included in income of the NED's personal Company, a similar concession can apply, but I would suggest that your client should have a copy of confirmation (from HMRC)  of that .

It should not be overlooked that the Company is responsible to ensure PAYE is operated correctly and fully, and will be liable to any Tax & NIC (as well as any penalties & interest thereon) if found wanting!!


I hope this is helpful.

Thanks (1)
Share this content