Summer 2006 Newsletter


Brave New World

Business Not Pleasure

Summertime Blues

All That Glitters...

Casting The Net

Trust Gordon?

It Ain't Over...

One In The Eye

Keep Your Nose Clean

Foreign Affairs

When Is A Car...

Don't Walk Away

Avoiding, The Issue

Brown Is Anti-PC

VAT's Up Doc?

Fuel's Gold

An Age-old Question?

That's Unfair!

Year In Year Out

How Hard To Try?

It's A Rip-Off!

Outlaws Win

Show Some Restraint

Not Our Problem

They Cannot Be Serious?


Pension Disappointments

It Ain't Over...

Proverbially, it ain't over until the fat lady sings. Legally, it's over when the House of Lords have delivered a judgment. The case about husband and wife companies - "Arctic Systems", or Garnett v Jones - is going to the Lords after the taxpayer won in the Court of Appeal.

The Revenue are continuing to argue that the company was an artificial arrangement to allow Mr Jones to take advantage of his wife's personal allowances and lower rates of taxation. She was paid dividends on a share that he let her subscribe for, while he did all the fee-earning work. HMRC believe that the law allows them to tax the income on him as arising under a "settlement" made by a husband for his wife.

It's good news that the Court of Appeal held for the taxpayer, after the lower levels of appeal had supported the Revenue. Jointly owning and running a company is a routine arrangement for many married couples, and the idea that the Revenue could attack it - in every case, or in some cases - was disturbing. The Court of Appeal held that the Revenue would not be able to attack it at all, if there was an outright gift of ordinary shares.

It was quite surprising that there was nothing on this in the Budget in March. Often HMRC get the rules changed when they lose a case. Perhaps they still think they can win, and the present rules are enough; perhaps they thought they could not come up with any better wording in the few months between the decision in December and the Budget in March. It's very hard to see how they can define what they want to attack without effectively reversing the independent taxation of husband and wife.

If you are a married couple - or a registered civil partnership - running a business together, you should watch this space: we will keep you posted on what happens.