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Alistair Darling, the new Chancellor of the Exchequer, very quickly let the country know what he thinks of the small business sector hitting business owners with an increase in capital gains tax and a commitment to end "the unfairness" of income sharing in husband and wife limited companies.
Having lost the "Arctic Systems" case HM Revenue & Customs (the Government) have decided to change the law to stop husband and wife companies "splitting the profits" to avoid paying too much tax. It is important to remember:
- There is nothing illegal about tax avoidance. Tax evasion yes but tax avoidance no.
- HMRC have agreed to a period of consultation before changing the law. Until then it is likely that they will continue to challenge income sharing arrangements.
- There are measures which can and should be taken now to stop your business becoming the next Arctic Systems.
Dave Smith of Accountax (the mainstay of the legal team which defeated HMRC in the Arctic sytems case) was in Manchester last week. Stuart listened to his comments about the case and his predictions of what HMRC will do next. If you want to discuss your current position don't hesitate to contact him. |
