IR wins ruling on husband & wife businesses
Discussion
According to Working Lunch, the IR may now be chasing the 1-200,000 small businesses (companies and partnerships) where the wife does a little and a large proportion of income is by dividend.
IR like to go back 6 years so the possibility of people getting a £50K tax bill is quite possible. HM Govt will get £1Bn out of it.
Looks like Eric Mc is going to be busy!
IR like to go back 6 years so the possibility of people getting a £50K tax bill is quite possible. HM Govt will get £1Bn out of it.
Looks like Eric Mc is going to be busy!
People pay more tax... have less disposible income... economy falters... redundancy... spending on credit increases... interest rates rise, mortgages go up, people have less money to pay them with... reposession...
I should've been an economist.
And if/when the Conservatives get back in, they'll be left picking up the bits.
>> Edited by simpo two on Thursday 30th September 15:01
I should've been an economist.
And if/when the Conservatives get back in, they'll be left picking up the bits.
>> Edited by simpo two on Thursday 30th September 15:01
This is Section 660a which has been in the statutes for years but the Inland Revenue are now starting to take a more novel interpretation of it.
It is very worrying to a lot of small husband & wife businesses, which includes my own.
This is not good news. I was very hopeful that the ruling would come down against the IR and establish useful case law.
Not content with IR35, the government are clearly continuing in their quest to drive contractors / freelancers out of business and force us to become good little employees again.
And they can
right off, as far as I'm concerned. I'm not becoming anyone's wage slave again. 
It is very worrying to a lot of small husband & wife businesses, which includes my own.
This is not good news. I was very hopeful that the ruling would come down against the IR and establish useful case law.
Not content with IR35, the government are clearly continuing in their quest to drive contractors / freelancers out of business and force us to become good little employees again.
And they can
right off, as far as I'm concerned. I'm not becoming anyone's wage slave again. The argument is that anyone who makes a fair contribution to the business is entitled to a fair remuneration/distribution from the business. Conversely, if they make no input (either through time, effort or money) then they are entitled to nothing.
This has always been the case and I have always advised my clients that, if a spouse was being put through the accounts as an employee or a shareholder, adequate evidence of the contribution made to the business would need to be available for inspection if required.
The big question is, what entitlement does a person who only has a £1 stake in the form of one £1 share in a limited company have in the form of dividends, particularly when there is no apparent evidence that they have any significant involvement in the company?
This has always been the case and I have always advised my clients that, if a spouse was being put through the accounts as an employee or a shareholder, adequate evidence of the contribution made to the business would need to be available for inspection if required.
The big question is, what entitlement does a person who only has a £1 stake in the form of one £1 share in a limited company have in the form of dividends, particularly when there is no apparent evidence that they have any significant involvement in the company?
JonRB said:
Not content with IR35, the government are clearly continuing in their quest to drive contractors / freelancers out of business and force us to become good little employees again.
These scum hate small business. They know small-businessmen used to have a range of tax strategies which were legal and reduced the overall percentage of tax paid - and they couldn't stand that entrepreneurs should gain when employees do not - obviously unfair to their way of thinking...
Well of course its not ferkin equal!!!! We take *risks* and expect *rewards* for doing it!
Labour - the party of red-tape and the removal of any benefit of being self-employed or a small-businessman.
JonRB said:
This is Section 660a which has been in the statutes for years but the Inland Revenue are now starting to take a more novel interpretation of it.
Overview here...
www.inlandrevenue.gov.uk/bulletins/tb64.htm
Summary is that they are closing the loophole of diverting income from a higher rate taxpayer to a lower rate/non taxpayer.
Eric Mc said:My wife is a 50% shareholder of my company and therefore owns half the shares. She paid for them fair and square, even though it was only a nominal sum.
The big question is, what entitlement does a person who only has a £1 stake in the form of one £1 share in a limited company have in the form of dividends, particularly when there is no apparent evidence that they have any significant involvement in the company?
Surely a shareholder, regardless of percentage share, is entitled to dividends?
If I bought shares in a dildo factory I would expect to get a dividend regardless of whether I used the damn things or not (I don't) and I certainly wouldn't expect to have any involvement whatsoever in the company in order to receive that dividend.
This is clearly a case of the government trying to create further "special cases" that net them more tax.
>> Edited by JonRB on Thursday 30th September 16:07
JonRB said:
Not content with IR35, the government are clearly continuing in their quest to drive contractors / freelancers out of business and force us to become good little employees again.
Apparently the law they're basing this on goes back to 1936. As you can imagine I'm completely unemployable
so I wonder what fate lies in store for me? 
I know, we can all go and work in Local Government... (spot the flaw in this argument) John RB - they are applying the "Risk and Reward" factor to spouse's shareholdings. If the spouse shareholder only owns the share in an attempt to split the income drawn from the company, then that is not sufficient to allow the transaction to stand as a legitimate tax avoidance method. The principle was established back in 1984 with Furness V' Dawson in that any transaction or series of transaction had to have a genuine commercial reason behind it - and saving tax was deemed not to be a genuine commercial reason.
simpo two said:You're quite right, it does (or thereabouts). However, it is only this year that they have sought to apply it (or enforce it) in the way they are.
Not content with IR35, the government are clearly continuing in their quest to drive contractors / freelancers out of business and force us to become good little employees again.
Eric Mc said:Indeed, and I can see that. I do apologise if my previous post came across as a little confrontational. I was just a little upset and disappointed that the decision went against us.
John RB - they are applying the "Risk and Reward" factor to spouse's shareholdings. If the spouse shareholder only owns the share in an attempt to split the income drawn from the company, then that is not sufficient to allow the transaction to stand as a legitimate tax avoidance method. The principle was established back in 1984 with Furness V' Dawson in that any transaction or series of transaction had to have a genuine commercial reason behind it - and saving tax was deemed not to be a genuine commercial reason.
I do still maintain that in seeking to enforce Section 660a in the way that they are, the Revenue are in effect once again tightening their grip on small businesses and PSCs. And, further, they seem to be on a virtual witch hunt on the latter.
So if you employed someone (not a family member) and paid them more than the going rate would the IR be interested then...?
Perhaps they'd recoup a similar amount of revenue if they sacked the tax inspectors that are going to waste months investigating this.
Just simplify the tax system and we'd all save a lot of stress and the government would be better off too.
Perhaps they'd recoup a similar amount of revenue if they sacked the tax inspectors that are going to waste months investigating this.
Just simplify the
tax system and we'd all save a lot of stress and the government would be better off too.Article at Shout99.
"According to Wilkins Kennedy the Revenue is most likely to investigate small family companies dependent on the personal services of one person and with a low asset base. In particular they are interested in where the main earner does not draw a market value salary and dividends are paid to shareholders paying tax at lower rates."
Oh bugger.
"According to Wilkins Kennedy the Revenue is most likely to investigate small family companies dependent on the personal services of one person and with a low asset base. In particular they are interested in where the main earner does not draw a market value salary and dividends are paid to shareholders paying tax at lower rates."
Oh bugger.
GregE240 said:
Face it - the ONLY reason you contractor types do this is for one reason and one reason only -
TO AVOID PAYING TAX.
Not true. The money is nice. But not having to put up with company bollocks, bitching office politics, "career advancement", annual reviews, unpaid overtime, holiday entitlements or the rest of the crap permies have to endure is a big plus too. Being able to simply not renew your contract if you don't like it there is great too.
GregE240 said:It is perfectly fair. It's called choice. If the grass is so much greener over this side of the fence then come on over.
Its not fair.
GregE240 said:I do.
Nobody likes it.
GregE240 said:I don't.
Most if not all, hate it.
GregE240 said:Not quite, but it has certainly slowed down to a crawl.
But, the gravy train stopped.
GregE240 said:This is PistonHeads. It's bitch / rant central. You know that.
All change please. And stop bitching about it.
GregE240 said:
Sorry kids, no sympathy from me.
Face it - the ONLY reason you contractor types do this is for one reason and one reason only -
TO AVOID PAYING TAX.
Its not fair.
Nobody likes it.
Most if not all, hate it.
But, the gravy train stopped.
All change please. And stop bitching about it.
Tax avoidance is legal - tax evasion is not!
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