The taxman has lost a House of Lords appeal that could
have forcedIT contractorsto pay more tax from
businesses they had set up with their spouses.
The Professional
Contractors Group (PCG) had backed a case being fought by Geoff
and Diana Jones of
Arctic Systems Ltd against HMRC.
With PCG's backing, the Joneses have spent the past three years
battling the Revenue's efforts to reinterpret a law retrospectively
and mount a tax raid on companies that are jointly owned by one
revenue-earning partner and one non-earning partner, the PGC
said.
Geoff Jones said, "Diana and I are delighted that the Law Lords
have vindicated our position, and confirmed that we have done
nothing wrong.
"This has been a terrible ordeal for us, which looked like it
could cost us our home at one point. We are relieved it is all
over, but I am still extremely angry that the government tried to
pull this stunt in the first place."
PCG chairman David Ramsden said, "This is an enormous relief for
family businesses throughout the UK, who had been facing a tax rise
from a previously obscure bit of law.
"We will now be working to ensure that HMRC respects this
decision and does not attempt to penalise family businesses
unfairly."
If the Joneses had lost, HMRC would have been able to demand
tens of thousands of extra pounds in tax from their joint business,
going back six years.
HMRC would have then gone after thousands of other IT contractor
firms set up in the same way.
More details on the case >>
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