NIM12006 | Class 1: Calculating NICs for Directors: Fees received by professional partnerships: Definition of insubstantial

Regulation 27(2)(d) of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

Regulation 27 does not define ‘insubstantial’ in the phrase “Payment is an insubstantial part of the gross receipts of the firm”. Each case therefore depends on its own facts. The question to be answered in each case is whether the payment is not large or significant enough in comparison to the gross receipts. If further advice is needed, please contact IPD Technical.

At first sight the requirement differs from that for the tax concession, ESC A37, which is for the fees to be a small part of the profits. However, in practice the comparison to receipts is also used for tax. Accordingly fees that have been accepted as a small part of the profits for the purposes of ESC A37 will satisfy the requirement in regulation 27(2)(d).

From 6 April 2018, ESC A37 was enacted by the enactment of Extra Statutory Concessions Order 2018. For further information see EIM02500.