Treatment of fees for nominee directors
A nominee director is someone who acts as a non-executive director on the board of a company. This person is normally appointed to act on behalf of another person or company and is effectively their representative on the board. For example, a shareholder, creditor or interest group. There can be conflicts of interest that arise for someone in this position.
Where a director of Company A is appointed to the Board of Company B as a nominee of Company A, and hands over his fees from Company B to Company A, those fees may be assessed on Company A rather than on the director provided certain conditions are satisfied.
These conditions (in Regulation 27 of the Social Security (Contributions) Regulations 2001) broadly mirror those laid out in Extra Statutory Concession (ESC A37), where an individual in receipt of fees paid in respect of a directorship can treat that income as trading income of a partnership or a company rather than as his or her employment income.
The Inspector dealing with the accounts of the company to which the fees are handed over, will decide whether those fees are to be treated as income of that company.
Source: HM Revenue & Customs | 22-07-2019