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Prohibition of tax-free payments to directors
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156. (1) It shall not be lawful for a company to pay a director of the company remuneration (whether as director or otherwise)—
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(a) free of income tax or the universal social charge, or
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(b) otherwise calculated by reference to or varying with the amount of his or her income tax or to or with the rate of income tax,
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except under a contract which was in force on 31 March 1962 and provides expressly and not by reference to the constitution for payment of remuneration in that manner.
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(2) Any provision contained in—
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(a) a company's constitution;
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(b) any contract other than such a contract as is mentioned in subsection (1); or
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(c) any resolution of a company or a company's directors,
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for payment to a director of remuneration in the manner referred to in subsection (1) shall have effect as if it provided for payment, as a gross sum subject to income tax and the universal social charge, of the net sum for which it actually provides.
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