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| CURRENT SECTION :: Section 660 / S660 |
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Dawn Primarolo was given the chance to clarify several points regarding s660A when questioned by the Liberal Democrats Small Business MP, Brian Cotter, earlier this week. The controversial law, which attack dividends paid out of husband and wife companies, was widely criticised last year. Experts have been calling for clear guidance for taxpayers, and as much certainty as is possible to ensure they fulfil tax obligations, particularly in this age of self assessment. It is widely felt that although some aspects of the Revenue’s guidance on the settlements legislation were previously known, key elements were not. With such uncertainty it was a golden opportunity to put matters straight. Questions were deflected however, with some points being attacked as 'economical with the truth', according to AccountingWeb This is the exchange that was recorded: Brian Cotter: What measures have been used by the Inland Revenue to notify small businesses of their obligations under section 660A of the Income and Corporation Taxes Act 1988 Dawn Primarolo: The Inland Revenue's Trusts Settlements and Estates Manual is publicly available and contains some guidance on this. Further detailed guidance (with examples) of the interpretation and application of Section 660A ICTA 1988 was published in Tax Bulletin 64 in April 2003 and was followed by further explanations and examples in November and December 2003. More guidance will be in the February edition of Tax Bulletin. Brian Cotter: How much revenue has been raised under section 660A ICTA 1988 in each of the past six years. Dawn Primarolo: The information is not available. Brian Cotter requested a statement on the impact that backdating payments under section 660A ICTA 1988 will have on small businesses. Dawn Primarolo: Section 660A ICTA 1988 applies to individuals. By paying tax under this section for earlier years individuals are simply paying the tax that would have been due if they had not sought to avoid tax. Brian Cotter: How many inquiries has the Inland Revenue received from small businesses in regard to section 660A ICTA 1988. Dawn Primarolo: The information is not available. Brian Cotter: How many companies have (a) been investigated for possible contraventions of section 660A ICTA 1988 and (b) had action taken against them as a result in each year that the Act has been in operation. Dawn Primarolo: None. Section 660A ICTA 1988 applies to individuals not companies. Brian Cotter: What recent information has been made available to small businesses about how section 660A ICTA 1988 will be applied; and if he will make a statement. Dawn Primarolo: The Inland Revenue's Trusts Settlements and Estates Manual is publicly available and contains some guidance on this. Further detailed guidance (with examples) of the interpretation and application of Section 660A ICTA 1988 was published in Tax Bulletin 64 in April 2003 and was followed by further explanations and examples in November and December 2003. More guidance will be in the February edition of Tax Bulletin. TaxZone's Gary Mackley-Smith, noted that the Minister's answers were economical with the truth: "The Trusts Settlements and Estates Manual does not provide information that is relevant to the current attacks under s660A. Until April 2003's Tax Bulletin was published, many in the tax profession were unaware of the Revenue's views of the settlement provisions as applied to husband and wife companies." He added: "For the Minister to admit that information is not available to show how much revenue has been raised under section 660A ICTA 1988 is astonishing. The information is not being released because it is too sensitive; and if the data is not kept then it should be. My understanding is that in the last ten years about 200 companies have faced s660A attacks, and there are around 50 cases currently being worked - which is likely to increase following the recent incorporation fever." Previous Page
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