Quarterly News

'Income shifting' legislation delayed.

The introduction of the proposed legislation on 'income shifting' has been delayed until April 2009.

You may well remember that HMRC proposed to legislate following their defeat in the Arctic Systems case. This 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 published draft legislation to prevent a tax advantage being gained through 'income shifting'. The rules were to start from 6 April 2008 and would have applied to company dividends and profits from a partnership.

The proposed rules had been very widely drafted and would potentially have caught 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.

The government has reconsidered its position following a period of consultation and now believes that a further period of consultation will ensure that legislation in this area provides clarity and certainty for businesses and their advisers.

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.

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Current News Highlights

Income shifting.

The introduction of the proposed legislation on 'income shifting' (highlighted in our Spring 08 edition) has been delayed until April 2009.

Employer provided vans.

The benefit in relation to employer provided vans increased significantly last year. Now is the time of year for P11D completion so don't be caught out.

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