Company Director PRSI

Sunny Dayz

Could someone let me know what is the correct PRSI class to apply to wages for a company director?

Citizen2011

Depends on shareholding and whether the director can exercise ultimate control - but generally Class S for >51% shareholding and Class A for =/< 50%.

barneystinson

Citizen2011 wrote: »

Depends on shareholding and whether the director can exercise ultimate control - but generally Class S for >51% shareholding and Class A for =/< 50%.

Ehhh, I don't think so. As a general rule of thumb, proprietary directors (>15%) pay Class S. You'd want to have a ruling from the Scope section in DSP to justify operating a class other than Class S on a proprietary directorship.

smeharg

barneystinson wrote: »

Citizen2011 wrote: »

Depends on shareholding and whether the director can exercise ultimate control - but generally Class S for >51% shareholding and Class A for =/< 50%.

Ehhh, I don't think so. As a general rule of thumb, proprietary directors (>15%) pay Class S. You'd want to have a ruling from the Scope section in DSP to justify operating a class other than Class S on a proprietary directorship.

And scope aren't issuing rulings anymore...

Citizen2011

Incorrect. Propriety Directors at 15% or more is used to determine an obligation to file a Form 12 Directors Tax Return - Class S the Director has to have contriol usually above 51% or more. "As a rule of thumb"

barneystinson

Citizen2011 wrote: »

Incorrect. Propriety Directors at 15% or more is used to determine an obligation to file a Form 12 Directors Tax Return - Class S the Director has to have contriol usually above 51% or more. "As a rule of thumb"

No need to be narky!

You are confusing "control" and "Ultimate control". Can you quote a link that says a person has to exercise ultimate control?

What determines the PRSI class applicable is actually whether there is a Contract of Service or a Contract for Services, http://www.welfare.ie/en/publications/documents/codeofpract.pdf

If you read the literature in the area, you'll see all of the references are to "self employed company director", so if for example you are a 20% shareholder and director of your dad's company, and everyone there has to do what you tell them, and you come and go as you please, with no written contract of employment, and your salary is whatever you and he agree depending on how business is going, then you are a Class S contributor, simple as.

J.Ryan

The UK case of BERR V Neufeld & Howe (2009) seems to support the position that directors could be considered "employees" for PRSI purposes, regardless of their shareholding or control over the company.

Scope has not issued decisions for a while

Joan Burton (Minister for Social Protection) has stated in the Dail (6 March 2012)

"The determination of the PRSI insurability status of working directors has been the subject of recent legal advice and court judgements. As a result the Department is currently examining its procedures for determining the insurability status of working directors to ensure that its decisions are in accordance with best practice and legal advice. I regret the difficulties caused by the delay in processing cases for decision however this is a very difficult and complicated aspect of insurability and it is vital that this matter be examined fully before any further decisions are issued"


However the common practice has been class S, there is no right or wrong answer, but I would suggest deciding whether you want to be class A or S and writing to the scope section and giving the details and then citing recent cases (class A) or the custom (of class S) and saying unless they write to you stating that your position is incorrect, you will assume that you are adopting the correct treatment for the circumstances outlined.

Shane732

J.Ryan wrote: »

The UK case of BERR V Neufeld & Howe (2009) seems to support the position that directors could be considered "employees" for PRSI purposes, regardless of their shareholding or control over the company.

Scope has not issued decisions for a while

Joan Burton (Minister for Social Protection) has stated in the Dail (6 March 2012)

"The determination of the PRSI insurability status of working directors has been the subject of recent legal advice and court judgements. As a result the Department is currently examining its procedures for determining the insurability status of working directors to ensure that its decisions are in accordance with best practice and legal advice. I regret the difficulties caused by the delay in processing cases for decision however this is a very difficult and complicated aspect of insurability and it is vital that this matter be examined fully before any further decisions are issued"


However the common practice has been class S, there is no right or wrong answer, but I would suggest deciding whether you want to be class A or S and writing to the scope section and giving the details and then citing recent cases (class A) or the custom (of class S) and saying unless they write to you stating that your position is incorrect, you will assume that you are adopting the correct treatment for the circumstances outlined.

This....

All scope rulings have been pretty much put on hold. The reclass from A to S was proving to be a cash-cow and the UK cases, along with others have given Scope what they needed to slow the thing down. They also introduced a 4 year time limit.

They got hit for some big refunds when people latched on to this first of all.