Originally posted by Lance
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It's rarely as simple as "is it legal or not". There's primary legislation, reams of it, that covers loads of different things. Inevitably you end up with some situations where one part of the legislation suggests X, another part suggests Y. This is where cases can end up going to Court, with taxpayer insisting X should apply, HMRC insisting Y should apply. A judge rules one way or the other, explaining their reasoning, and that forms case law. This then sets a precedent for identical situations, unless overruled by a higher court.
Inevitably there will be situations where something is similar to a historic piece of case law, but not identical. This means you can't guarantee relying on the case law, as the facts are a bit different. Inevitably different advisers will have different views on what might then apply.
A fairly key part of the Arctic Systems case was that the wife's shares were exactly the same as the husband's. Therefore legally she wasn't just being given a right to income, she also had legal voting rights no lower/different to his. It was no more his company than it was hers.
By issuing different share classes to a spouse, by definition you're demonstrating you consider the shares one spouse owns to be different to those owned by the other spouse. I therefore don't see safety that it's bound by the decision in Arctic Systems.
Others will take a different view, plus of course plenty of situations there will be something done that is "wrong", but they get away with it. Either because HMRC don't know, or perhaps HMRC do know but don't have the resources to pursue.
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