Arctic Systems case goes to appeal

The appeal hearing of the tax commissioners' ruling in the Arctic Systems s660a case has been set for 15 March.

Husband and wife business owners Geoff and Diana Jones will meet the Inland Revenue in court after the Professional Contractors Group funded a challenge.

The merits of the case have been hotly debated among tax professionals since the special commissioners' ruling last summer. The Revenue said that the couple owed £42,000 in additional tax payments on dividends paid from their company over a six-year period.

Even though they had equal shares in the company, the husband had generated the money. The commissioners were split on the merits of the case, with the presiding commissioner, Judith Powell, using her casting vote in favour of the Revenue.

The case is governed by settlements legislation. Tax professionals say that the Revenue's guidance on this area of tax law has been unclear and that the appeal should clarify its interpretation.

The Revenue believes that the Joneses have broken the law. More than 100 other cases involving companies and partnerships are awaiting the ruling because the taxman argues that tax planning here also breaches the same law.

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