S660 - A Taxing Experience

The UK government recently suffered a severe blow to their flagship campaign to force women to get on with the housework and leave the serious business of making money to the menfolk. This happened just before Christmas 2005 when some very sensible judges basically told the Inland Revenue that they were talking out of their collective and rather substantial bottoms.

Arctic Systems Ltd, a husband and wife business co-owned by Geoff and Diana Jones, took the IR to the high court to establish their right to both profit from their hard work and investment in the company. They were supported in this endeavour by the Professional Contractor's Group.

The Hectors seemed to object to Diana working with her husband and disagreed that she played a key part in the success of the company. They were especially dead against her being paid a dividend based on her equal share ownership. They seemed to have the idea that she could not have been cooking and cleaning the house while also keeping the company books and carrying out other important duties. "Lets face it," said an unnamed jobsworth, "if she really wanted to make herself some pin-money, she could have got herself a little job working in Tescos or something."

It was with this in mind that the Hectors decided to re-interpret and apply an obscure piece of tax legislation (S660a) and sent them a bill for 42,000 quid, claiming unpaid taxes going back over a period of 6 years. S660a is a settlement rule, used to prevent people passing across assets and income to family members in an effort to reduce their tax liabilities. It is quite an ancient rule, but it had never before been applied to company dividend payments until the Hectors unilaterally decided that the rule applied where a company director has his non-fee earning spouse as a joint shareholder. It became known as the 'married couples' business tax'. However, just in case Mr and Mrs Philip Green are worried about being chased for a chunk of the billions paid to Mrs Green as a well earned dividend, they need not. After all Mrs Green does not even live here. Anyway, the Hectors have easier fish to fry, or so they thought.

Unfortunately for them, but fortunately for Mr and Mrs Jones and for thousands of other small husband and wife companies, the appeal court judges disagreed and told them so in terms which left little room for interpretation, but which I will try to interpret anyway. Basically they told the IR not to be such a bunch of plonkers and to stop trying to change the rules in the middle of the game.

Diana and Geoff were overjoyed. Now, after several years of absolute misery and living in terror, they can get on with their lives. Or can they?

Even though the appeal court judges refused the IR leave to appeal to the House of Lords, the last step in the process, they have decided to appeal against this judgement anyway. So Diana and Geoff and every other small business in UK PLC is left hanging in mid-air yet again. Just how small-minded can the Inland Revenue become. Under New Labour, it seems very small-minded indeed.

Make no mistake, the Chancellors' fingerprints are all over this. So, no doubt even when they lose the HoL appeal, as they surely will, they are certain to sneak in some new legislation in the next budget tax review to catch people like Geoff and Diana. After all, we really can't have ordinary people thinking that they can profit from their hard work. If they did, who would pay for the politicians' pensions and tax-free expenses. It is worth noting that though the IR don't think that Diana actually does any work for Arctic Systems Ltd, they have no inclination to investigate if MPs' spouses and brats are actually earning the money paid to them for their 'secretarial work' on behalf of our exalted representatives.

Note for the BBC. Losing this case did not result in a loss of tax revenue for the government. You cannot lose what is not yours to have in the first place.

Note for the Inland Revenue. What you tried to do here is immoral and unethical and is plain bullying. You are supposed to be here to help the hard working people of this country, not score points in some game called 'Fleece the Suckers'. What you tried here is plain dishonest and you are lucky that the leaders of our wonderful police forces are too busy trying to nick coked up models to take any interest.

Note for the People of the UK. The current government and their gofors try to represent their victims as 'tax dodgers' or 'racists' or in other similar emotive terms. Beware, they are very good at villifying and criminalising people when it is in their interests. The last people to do that with huge success were the Nazis. Remember the Rev. Martin Niemoller!

Note for the Government. You have tried your best to destroy the UK's small businesses with IR35 and S660A and, it is almost certain that you will try with something else. Please stop. Call off your dogs and leave us all alone to get on with our businesses so that we can help to make the UK a good and prosperous place to live.

Other points worth noting.

An old lady and a reverend went to prison recently for failing to pay their full council tax (tax evasion). John Prescott didn't pay his council tax for 8 years. But when he was found out, he promised to pay it all back so that's OK then!

Dawn Primorollo, the Paymaster General and Gordon Brown's right hand woman, failed to pay her poll tax in the 1990s. This is also tax evasion. Nothing happened because someone else paid it for her.

We at Pukiemon.com name Geoff and Diana Jones as Pukiemon People of the Year.