Following the decision in the
Arctic Systems case HMRC have provided guidance
on how tax returns are to be dealt with following
the House of Lords’ decision.
Cases currently open
Any cases left open pending the outcome of
the case will now be reviewed by HMRC and settled
in line with the decision in the Arctic Systems
case where the facts indicate that that is
the appropriate outcome. The guidance indicates
that the taxpayers will be dealt with in the
same way as Mr and Mrs Jones where the spouse
owns either ordinary shares in a company or
an ordinary unlimited interest in a partnership.
2005/06
The guidance notes that these returns should
have been submitted in line with the Court
of Appeal decision, which was in favour of
the taxpayer, so that no amendments should
need to be made to these returns following
the House of Lords’ decision.
2006/07
The deadline for submission of these returns
is 31 January 2008 and the guidance states
that they should be completed on the basis
of the House of Lords’ decision.
Forthcoming legislation
Following the decision, the government announced
its intention to legislate to prevent what
they regard as the use of ‘non-commercial
arrangements’ to divert income from one
spouse to another. We will keep you up to date
with developments.
Please contact us if you require further clarification
of how this affects you.
Internet Link:
HMRC guidance
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