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Taxing matters

06 September 2007 / Peter Vaines
Issue: 7287 / Categories: Features , Tax
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ARCTIC SYSTEMS >>
CLARITY ON UK TAX LIABILITY FOR NON UK RESIDENTS >>
RECTIFICATION FOR TRUSTEES >>

ARCTIC SYSTEMS—THE FINAL SOLUTION

The House of Lords has now delivered judgment in Arctic Systems—otherwise known as Jones v Garnett (Inspector of Taxes) [2007] UKHL 35, [2007] All ER (D) 390 (Jul) and it makes interesting reading.
Mr and Mrs Jones each had one share in a company which provided computer consultancy services. Mr Jones did all the work with the clients; Mrs Jones did all the back room admin work; they took small salaries and had large dividends thereby minimising their liability to tax and national insurance contributions. HM Revenue & Customs (HMRC) said that it was not a commercial arrangement for Mr and Mrs Jones to hold one share each and to pay dividends in this way—it was an arrangement conferring bounty on Mrs Jones and therefore a settlement within the Income and Corporation Taxes Act 1988, s 660A (now the Income Tax (Trading and Other Income) Act (ITTOIA 2005), s 624) so that the whole of the income

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MOVERS & SHAKERS

Birketts—trainee cohort

Birketts—trainee cohort

Firm welcomes new cohort of 29 trainee solicitors for 2025

Keoghs—four appointments

Keoghs—four appointments

Four partner hires expand legal expertise in Scotland and Northern Ireland

Brabners—Ben Lamb

Brabners—Ben Lamb

Real estate team in Yorkshire welcomes new partner

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