Why does Arctic fail the test?
Why isn’t Revenue & Customs paying for both sides in the Arctic Systems case? It’s a question that has troubled many advisers involved, who are concerned with the payment of dividends to family-owned businesses
Where there is a legal point that needs clarification, it is a convention
that the Revenue pays both its own costs and the taxpayers’, which in this case
may stretch into six figures.
Arctic’s bill is being paid by the Professional Contractors Group, among
others.
The Revenue claims that this is not a test case; that it has always taken the
view it now takes towards section 660A, on which it is basing its claim. If that
is the case, tax advisers never knew anything about it, they say, and s660A has
never been used previously in this context.
Dave Hartnett, deputy chairman of Customs & Revenue, has even conceded
that a test case might be useful, tax advisers add, before he consulted advice
and changed his mind.
Mr Justice Park, who heard the case in the High Court, pointed out that his
decision was made in accordance with established principles, which the Revenue
may cling to in insisting that this is an individual case.
The 200,000 or so businesses wondering what to put in their self-assessment
tax returns, however, are likely to disagree.
The row has added yet more complexity to the already Byzantine UK tax system.
Isn’t it time the Revenue took a lead in trying to clarify matters?