A. Regulation 15(1)(a) of the Social Security (Contributions) Regulations 2001 provides that if someone is employed by two or more different employers who are carrying on ‘business in association’ with each other and each one pays them, the earnings from each employment must be aggregated and treated as a single payment of earnings, with NICs calculated on the total unless it is not reasonably practicable to do so.
The term “business in association” is not defined in either the Social Security Acts or Regulations, nor is there any judicial interpretation of it in the context of NIC liability. However, it is important to distinguish the concept of ‘businesses in association’ from that of ‘associated companies’. Simple shareholding or control is not sufficient to satisfy the requirements for there to be a business in association.
To satisfy the condition companies must have some degree of common purpose, substantiated by the sharing of facilities, personnel, accommodation, customers, etc. All these elements need not be present in a particular case but the greater the interdependence, the greater the likelihood of treating the companies as being in an association. Companies will, therefore, be treated as being in association with one another where they share profits or losses or to a significant degree, resources. Consequently, where two companies share expenses – for example, staff, premises, etc., this would tend to affect profits or losses of both.
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