Big Four firm Ernst & Young has slammed HM Revenue & Customs for contesting the Arctic Systems tax case, after its appeal was defeated in the House of Lords yesterday.
Patrick Stevens, tax partner at E&Y, said: ‘The outcome raises questions about why HMRC decided to contest the case in the first place and create enormous uncertainty for several years as the legal process was unravelling.
‘Even if there was some doubt about the correct interpretation of the law, it had not been challenged by the Revenue for many years. It may have been far simpler for the Revenue to change the legislation, if that was the desired result.’
He also pointed out that because of the technical reasoning behind the judgment, the tax benefits will only apply where it is husband and wife shareholders and ‘not, for example, father and children’.
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