Topical Tax Issues
Taxman attacks husband-and-wife firms
The storm over the Inland Revenue's treatment of family companies is gathering force, with politicians and business leaders joining the fray. This relates to a number of recent cases in limited companies where husband and wife own the shares 50:50 and have received large, unexpected tax bills on dividends from their business.
These demands are back-dated over six years and are being made under a clause known as Section 660A of the settlements legislation (ICTA 1988). Where the husband is the main fee earner, the Revenue is claiming that all the income generated is his and that dividends paid to his wife are, in fact, his and should be taxed at his higher rate.
What makes these cases so amazing is the fact that the Inland Revenue's own website advised couples to arrange their tax affairs in such away as in now deemed unacceptable!
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There are a number of grounds on which to oppose the Revenue's claims.
Contact Whitehouse & Co if you have any concerns.