The long running saga of Geoff
and Diana Jones and their company, Arctic Systems
Limited, has recently been back to the courts
for the final time to the House of Lords.
Just in case you need a reminder, the case
concerned a company owned by a husband and
wife, Geoff and Diana Jones, and hinged on
whether dividends paid by the company to Mrs
Jones (who was not a higher rate taxpayer)
should be shown on her husband self assessment
return and taxed as his income at a higher
rate of tax. You may recall that the case went
to the Court of Appeal where the taxpayer won.
The 33 page final judgment delivered a resounding
victory for Mr and Mrs Jones with all five
of the judges unanimously agreeing that HMRC’s
appeal against the previous judgment should
be dismissed. We have included a link to the
full judgment at the bottom of this article.
Anne Redston, who is the Chartered Institute
of Tax (CIOT) spokesperson, said:
“The CIOT is delighted that, after such
a long battle, the House of Lords has confirmed
that HM Revenue & Customs (HMRC) were wrong
to attack husband and wife businesses in this
manner. The CIOT has always considered that
HMRC were wrong to use this obscure legislation
against small businesses like the Jones’s,
and the House of Lords has now agreed with
us.”
If the case had gone in favour of HMRC then
this may have resulted in many husband and
wife businesses being liable to additional
tax charges going back up to six years.
Internet Links:
PCG
article and House of Lords
judgment
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