The government will introduce new legislation to stop the ‘unfair’ use of
commercial tax rules, in the light of the taxman’s loss in the courts against
Geoff and Diana Jones of Arctic Systems.
The Treasury has stated that the conclusion of the husband and wife tax
battle, which left Geoff and Diana Jones with a more favourable tax bill, has
brought to light the need for the government to ‘ensure that there is greater
clarity’ in the law on income-splitting.
Where couples enter into a business agreement that they would not normally do
with someone else, to minimise their tax liability then it results in an ‘unfair
outcome’ that increases the tax burden on other taxpayers, the Treasury said.
‘The government will therefore bring forward proposals for changes to
legislation to ensure this is the case. In the meantime, HMRC will apply the law
as elucidated by the House of Lords and will be providing guidance in due
‘It is the government’s view that individuals involved in these arrangements
should pay tax on what is, in substance, their own income and that the
legislation should clearly provide for this.’
The CIoT’s Anne Redston warned that it would be very difficult to distinguish
between ordinary family businesses and those set up that the government believes
abuse the system, reported the
Advisers yesterday warned the taxman against a
‘knee-jerk’ reaction to its loss in the House of Lords.
HMRC compliance crackdown targets SMEs, resulting in £468m for year ending 31 March 2016
Report argues that the government must change the way it makes tax and budget decisions
Committee expresses concern about costs to businesses and April 2018 implementation date
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit