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| CURRENT SECTION :: Section 660 / S660 | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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A small business website run by the government is advising taxpayers to structure their finances in a way that defies the Revenue’s ruling on husband and wife firm, Arctic systems. According to the advice on Business Link, it says that owners of such ‘husband and wife companies,’ should strategically use share dividends to “top up” their remuneration strategy. In doing so, it claims remuneration “needn’t be a thorny issue,” as long as firms are seen pursuing a “consistent, fair and open” procedure. Tax experts say the online guidance is causing chaos by encouraging couples to cut their tax bills by sharing profits just as the Revenue is beginning a high-profile clampdown. Accountants also warn the contradictory advice means some firms are struggling to complete their tax bill, unsure of which arm of the government policy to believe. Anne Redston, tax partner at Ernst & Young, agrees the taxman’s guidance firmly smacks against Business Link, an information service funded by the DTI. “It clearly contradicts the Revenue’s view set down in a bulletin in April 2003,” she told the Financial Times. “It ‘s strange for one branch of government [Business Link] to be suggesting this as a good idea, and the other [the Revenue] to say this tax avoidance and if you do it we will seek interest and penalties.” With more than 60 per cent of UK businesses family-owned, the Special Commissioners stand accused of siding with a process that could mean hundreds of thousands pay tax retrospectively or need to alter their company structure. Small business groups including the Federation of Small Businesses have supported the protest, suggesting the Artic Systems case reflects how the Revenue “watches a trend in business behaviour” before deciding to act. A statement issued from the DTI offers no alibi for the IR, which was on board for Business Link from the start, despite its opposing message. “This is surprising because the Revenue contributed to the content when we launched the website,” it says The Revenue has denied any clash between its rules and guidance stated on Business Link, which continues to recommend a list of ‘good ideas’ to family businesses. It states: “Share the business profits between the two of you if your spouse is a partner. Split your workload between you if that will keep you at a lower tax rate.” The site explicitly says those seeking to employ their spouse should consult professional advice. Subsequently, this frees up entrepreneurs to “look at tax benefits for your spouse,” as well as outstanding personal and business tax charges. Previous Page
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