Stephen J. Dann
~ ATT ~
UK Tax Advisor


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Legislation currently passing through parliament



On 12th March, 2008 Alistair Darling delivered the 2008 budget. From the following links you may download PDF files containing The full budget speech

or, again in PDF format, HM Treasury's full Budget report usually costing £ 45.00.


" The landmark tax case involving the husband and wife IT business "Arctic Systems has finally reached a conclusion, with the House of Lords ruling in favour of Geoff and Diana Jones, the taxpayers. The case of Jones v Garnett (commonly called “Arctic Systems”), which has been running for several years, has centred on the issue of whether Mr Jones's salary was set at an artificially low level, and whether the dividends received by Mrs Jones should have been treated for income tax purposes as Mr Jones's income. There have been many twists and turns, as HMRC, having previously lost a unanimous ruling in the Court of Appeal, appealed to the law lords to tax Geoff Jones on dividends paid to his wife. HMRC had used Section 660 of the Taxes Act to argue that dividends paid to one partner were really earned and belonged to the major fee earning partner, a higher rate tax payer. It is a business structure used by thousands of married couples who jointly own a small business. The uncertainty over the case has left thousands of businesses concerned that they too could face large tax demands. In their judgment, read out to a packed chamber this morning, the Lords ruled that: The Joneses were creating an arrangement in the nature of a settlement when they subscribed for one share each, and set up their company Arctic Systems Ltd However, the exemption for gifts between spouses also applied and dividends paid to Mrs Jones were therefore not income arising under a settlement. No further appeals are possible under UK law, and it seems that HMRC will now have to review its guidance on settlements and on outright gifts. The opinions of the law lords can be read on the Parliament website:

Jones v Garnett - The "Arctic" case House of Lords' Decision




HM Revenue and Customs (HMRC) has issued a news release in response to a scam involving form P86. The scam apparently originated from Nigeria, and has been widely publicised in the press over recent weeks. The HMRC news release is reproduced below (Crown Copyright material is reproduced by permission of the Controller of Her Majesty's Stationery Office).


We have become aware of a letter purporting to be from the Inland Revenue (which integrated with Customs and Excise on 18 April to form Her Majesty’s Revenue and Customs) which asks for personal information from taxpayers employed outside the UK. The letter is accompanied by a bogus copy of form P86 and asks for personal Bank Account details. These documents have not been issued by the Inland Revenue (HMRC). The letter is signed by a Fiona Delaney. The Inland Revenue logo, telephone and fax numbers and the address on the letterhead are all false. Employers are urged to advise their overseas employees to ignore such letters and to report the incident to the Police.
If you have any doubt whatsoever about the authenticity of a communication purporting to be from HMRC please contact the HMRC office dealing with your tax affairs or ring HMRC as listed in the telephone directory.
Source - Inland Revenue News Release
Crown Copyright material is reproduced by permission of the Controller of Her Majesty's Stationery Office.

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