Correct PRSI level for wife of director employed by company

[pbyrne]

Hi Everybody,

(Not sure if this should be under the Tax or Social Benefits section so feel free to move if appropriate).

I would like to get some opinions on a PRSI question:

My wife has started working for our very small IT company.
She is a director of the company and has a massive 1% of the shares (from when it was formed as an off-the-shelf company).
She is being sub-contracted to another company (a recruitment agency) so is not "working under the direction or control" of my company (I believe that is the correct terminology).


From speaking with our company accountant it was not clear whether we should be paying PRSI for her at the A1 or the S class. We reckoned it should be A1 since she is not in control of the business and is only a small shareholding director. However she is a director so perhaps S is the correct class.

We have put a query into Social Affairs and now have to fill out a load of forms and check for case history and sign declarations etc - this sounds like a load of trouble for what I thought was going to be a simple query.

For my forthcoming discussion with the Inspector I would appreciate any comments arguing either case so that I know both sides of the question.

Thanks for any advice / info.

 

[Ham Slicer]

From what you say I would suggest that she is class A.

I'm not surprised you are confused by your accountant as there is no actual answer to this question.

Each case is different and must be assessed by scope section in SW office. I assume that's who you've been talking to.

 

[ARCH]

I would have taught she was assessed under class S, as a Director and because between her 1% and your (her husbands 99% I assume as you described the company as our company) she is able to control the company.
I believe the connected party rules apply her , but this you would need to ascertain for sure.

 

[Kiddo]

I agree with Ham Slicer. I had to deal with a similar case recently and was told by the Scope section of DSWFA that unless a director has a 50% shareholding in the company he/she must get approval for S class contributions from DSWFA...and they deal with it on a case by case basis.

 

[Joe1234]

I also think that class A applies because she is not a proprietory director of the company.

 

[pbyrne]

Hi,

Just in case anybody is searching for a similar problem - the response we got from dept of social welfare was that my wife would remain classed as a A1 employee rather than an S. I got the feeling that they would have viewed with suspicion a claim for her to go on as S but were happy for us to continue paying at the higher A1 rate (which is what we wanted anyway since she is not likely to be employed directly by the company for much longer).