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Prohibition of tax-free payments to directors.
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185.—(1) It shall not be lawful for a company to pay a director remuneration (whether as director or otherwise) free of income tax or of income tax and sur-tax or of sur-tax, or otherwise calculated by reference to or varying with the amount of his income tax or his income tax and sur-tax or his sur-tax, or to or with the rate of income tax or sur-tax except under a contract which was in force on the 31st day of March, 1962, and provides expressly, and not by reference to the articles, for payment of remuneration as aforesaid.
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(2) Any provision contained in a company's articles or in any contract other than such a contract as aforesaid, or in any resolution of a company or a company's directors, for payment to a director of remuneration as aforesaid shall have effect as if it provided for payment, as a gross sum subject to income tax and sur-tax, of the net sum for which it actually provides.
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