NIC plan nixed

For about ten years my client operated her business full time via a limited company and was paying income tax and Class 1 National Insurance contributions.

Following her marriage about two years ago my client operates the business on a part-time basis and the small profits of about £3 000p.a. have been drawn as director’s remuneration.

I was thinking that to protect my client’s National Insurance contributions record director’s remuneration of an amount between the lower earnings limit and the earnings threshold should be drawn. No NICs would be payable but the equivalent of one year’s minimum contributions are obtained.

My concern is that this would create a loss in the limited company. Would HMRC seek to disallow this and might this then have an adverse effect on the National Insurance position?

Readers’ thoughts are welcome.

Query 17 963 – Nicholess

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