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HMRC internal manual

National Insurance Manual

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

Regulation 27(2)(d) SSCR 2001

Regulation 27 does not define ‘insubstantial’ in the phrase “Payment isan insubstantial part of the gross receipts of the firm”. Each case therefore dependson its own facts. The question to be answered in each case is whether the payment is notlarge or significant enough in comparison to the gross receipts. Any cases of difficultyshould be submitted to Personal Tax Technical Longbenton via your Technical SupportManager (TSM).

At first sight the requirement differs from that for the tax concession, ESC A37, which isfor the fees to be a small part of the profits. However in practice the comparison toreceipts is also used for tax. Accordingly fees that have been accepted as a small part ofthe profits for the purposes of ESC A37 will satisfy the requirement in regulation27(2)(d).