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David Whiscombe of BKL Tax highlights the Government's intentions following the Arctic Systems case and the need to make representations in respect of legislation to counter the decision in that case.
 David Whiscombe
The statement"Small businesses and settlements legislation" The Government acknowledges the judgement given by the House of Lords in the Jones v Garnett (Arctic Systems) case. The Government is committed to maintaining fairness in the tax system. The case has brought to light the need for the Government to ensure that there is greater clarity in the law regarding its position on the tax treatment of 'income splitting'. Some individuals use non commercial arrangements (arrangements that they would not reasonably enter into with an arms-length third party) to divert income (which would, in the absence of those arrangements have flowed to them) to others. That minimises their tax liability, and results in an unfair outcome, increasing the tax burden on other tax payers and putting businesses that compete with these individuals at a competitive disadvantage. 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 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 course. The Government would not want commercial arrangements to be caught by any change to legislation. Consultation should help to ensure this". Comment(It would be churlish, small-minded and unworthy to observe that before becoming an MP, the Exchequer Secretary to the Treasury's experience of work appears to have comprised - as is typical of so many members of the present administration - employment as successively a union researcher, Press Officer, Parliamentary Liaison Officer and Constituency Party Secretary, which some might see as a poor grounding for an understanding of small businesses: so we won't make that observation.) Action neededWe believe that it is important for all advisers to small businesses to take whatever steps are possible, including lobbying decision makers, to resist the introduction of ill-thought out unfair and unworkable legislation. We would be delighted to email out to any interested reader the text of a letter that we have ourselves sent (see contact details below). The above item is reproduced with the kind permission of BKL Tax.
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About The Author  David has spent his entire working life in tax. He joined the Inland Revenue in 1976 as a fast-track direct entry Tax Inspector and left eleven years later as a Senior Principal having in the interim done jobs as diverse as District Inspector, training investigators and selecting the wine for the Chairmans Induction Day for new recruits. He joined Berg Kaprow Lewis in 1991 to head the tax function and has since then painstakingly assembled a team of people with great tax expertise, skills complementing his own, a sense of humour and (perhaps most important of all) an ability to communicate complex tax issues in plain English. BKL Tax is a division of Berg Kaprow Lewis LLP. For information about BKL Tax Consultancy Services, click here or call 020 8922 9222 for telephone support. |
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Article Added Saturday, 01 September 2007 |
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