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Section 660 - Revenue threatens Arctic Systems decision

Published on Jan 17, 2006 |

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The Inland Revenue has announced its decision to appeal against the landmark Arctic Systems court victory which had signalled lower tax bills for those caught by "Section 660".

The Revenue announced on Friday evening that it was seeking leave from the House of Lords to appeal against the decision.

The announcement will be a concern to family businesses where one partner performs most of the work but the spouse is also paid dividends from the company. It should be noted that the House of Lords have first to allow the Revenue to appeal the case - this is not a forgone conclusion.

The Professional Contractors Group (PCG) has expressed its disappointment at the decision by HM Revenue & Customs (HMRC) to seek leave from the House of Lords to appeal the Arctic case, Jones v Garnett.

PCG Chairman, Simon Juden said:

"Appealing to the House of Lords will exacerbate and prolong the uncertainty caused by HMRC's initial attempt to move the goalposts by changing their interpretation of 1930s legislation and announcing that they were doing so only after the fact."

"If the Government wishes to extend the scope of the settlements legislation to include these normal family businesses, the honest way to proceed would be - as the judges in this case stated - to legislate openly and clearly. We are profoundly disappointed that HMRC has chosen to expose hundreds of thousands of businesses to yet more uncertainty, especially with regard to their self assessment positions, rather than accept the common sense verdict delivered in this case."