NIM12002 - Class 1: Calculating Class 1 NICs for Directors: Definition of Director

Regulation 1(2) of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

Regulation 1(2) of SSCR 2001 defines director to mean:

• in relation to a company whose affairs are managed by a board of directors or similar body, a member of that board or similar body (sub paragraph (a));
• in relation to a company whose affairs are managed by a single director or similar person, that director or person (sub paragraph (b));
• 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 paragraph (c)).

Sub-paragraph (c) includes a person generally known as a ‘shadow director’. 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.

But the final part of sub-paragraph (c) ensures, for example, that a solicitor is not treated as a director merely because that person is the company’s legal adviser.