Government to take action on "income splitting" following Arctic Systems defeat

Click here for Hiscox Business Insurance

IT Contractor Mortgages
Contractor specialists - loans based on contract rate - Find out more.

Government to take action on "income splitting" following Arctic Systems defeat

Published on Oct 10, 2007

Alistair Darling's first Pre-Budget Report provided few real surprises for many commentators, although the abolition of taper relief has received the most criticism from the mainstream press.

You can read full coverage on our small business partner site, Bytestart.

The threat of future moves on "income splitting" in family-owned business (following on from the Arctic Systems case which HMRC lost) was also buried away within the PBR.

The following text was extracted from Chapter 5 of the publication, "Fairness and Opportunity for All":

5.99 The Government believes it is unfair that some individuals arrange gain a tax advantage by shifting part of their income, from dividends or another person who is subject to a lower rate of tax.

5.100 The Government will be launching a consultation shortly on prevent such income shifting, with the intention that this legislation 2008-09. The Government aims to ensure, through consultation, that intended to reduce tax, rather than commercial arrangements, are affected and that the administrative burdens of the legislation are minimised.

Naturally, we will update Contract Eye's Section 660 pages with more substance on these statements in due course.