660A decision may not apply to all
Family businesses may not all be hit by 'husband and wife' ruling
Family businesses may not all be hit by 'husband and wife' ruling
The High Court’s ruling on the Arctic Systems case may not be applicable to all family businesses, accountants said today.
Link: Arctic Systems loses landmark test case
Mike Warburton, senior tax partner at accountants Grant Thornton, said Mr Justice Park’s ruling left open the question of what would happen if the partner of a business doing the lion’s share of the work were paid a normal rate.
In the Arctic Systems case, the judge ruled that as Geoff Jones, an IT consultant, was paid a lower rate than he would have earned in the market as a whole, the Revenue’s case was stronger. But if that had not been the case, the Revenue might not have won, he said.
Warburton said: ‘It looks likely that the Revenue will use it against situations where salaries are low in order to allow dividends to be high.’
In the Arctic Systems case, Diana Jones, who carried out much of the administrative duties of the business, was paid higher dividends as she was a lower earner as a whole, and would thus pay lower tax on the dividend income received.
It also remained unclear, Warburton said, whether or not Revenue would attempt to use the judgment to claim retrospective tax from other family-owned businesses. In Arctic Systems’ case, it could not do so as it had lost the relevant files.
Arcitc Systems may now have to pay £6,000 in tax. If the bill had been retrospective, they would have to have paid £42,000.
The numbers you crunch tell a story. Your expertis...
19yEmbracing user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read...
View articleOrganisations can enhance their financial operations' efficiency, accuracy, and responsiveness by adopting platforms that offer them self-service cust...
View articleIn a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...
View resourceDiscover how AP dashboards can transform your business by enhancing efficiency and accuracy in tracking key metrics, as revealed by the latest insight...
View articleThree years after accountancy group DJH Mitten Clarke launched, they have announced that they have rebranded to DJH. The DJH Mitten Clarke name reflec...
View articleStatic budgets outdated. Embrace agile budgeting for a smooth year-end close and adapt to changing markets. Read More...
View articleSaffery Champness's strategic rebrand to "Saffery" reflects a bold step towards aligning its historic values with a modern, innovative ethos, fosterin...
View articleSumer’s CEO Warren Mead believes accountants have a responsibility to champion smaller and medium-sized businesses and that successful entrepreneurs a...
View articleMid-market firms experience largest percentage increase in fee income in 2023, as consultancy services start to become leading income streams for the ...
View articleBaker Tilly International has today announced record global revenues of US$5.2bn for the financial year ended 31 December 2023, up 11% on the previous...
View articleWhilst Small and Medium Enterprises (SMEs) account for around half of the turnover in the UK private sector[1], our own AAT research shows that over a...
View articleGrant Thornton UK as confirmed the appointment of Malcolm Gomersall as its new Chief Executive Officer. Gomersall, who has been with the firm for over...
View article