 January
2008
Income Shifting Consultation
You may well remember that the Arctic Systems case
involved a husband and wife who owned a company 50/50
and, broadly, took the profits out by way of dividends,
again 50/50. HMRC attempted to tax the dividends solely
on the husband, as he was performing most of the work
which generated the profits of the company.
Following HMRC’s defeat in this case, the government
has published draft legislation to prevent a tax advantage
being gained through what has become known as ‘income
shifting’. This legislation will apply from 6
April 2008 to:
- company distributions, usually dividends; and
- profits from a partnership.
The proposed rules are very widely drafted and will
catch many owner-managed businesses involving husbands,
wives and other family members, as well as businesses
run by non-family members, leaving many with a substantially
higher tax bill.
We will, of course, keep you informed of developments.
However, if you have any questions or concerns in the
meantime, please do not hesitate to contact us.
Internet Link:
Income
shifting consultation |
