Readers’ forum: State pension plan

My client carried out consultancy work through his personal service company. We checked his relationship with the various firms that he was working for over the years and were satisfied that the IR35 legislation did not apply. As well as this directorship he has some income from investments but his total income only occasionally exceeded his personal allowances. His wife has more substantial earnings.

My client’s income was enough for his day-to-day requirements so over the years he simply drew a salary from the company that was above the National Insurance lower earnings limit but below the primary threshold. In that way he avoided an income tax liability and built up more qualifying years thereby protecting his entitlement to a National Insurance retirement pension.

The consultancy work ceased during 2019-20 and the company has reserves of capital. The director...