Nunn Hayward - Special July 2007

Special Edition July 2007

Jones -v- Garnett (Arctic Systems): Victory for Mr & Mrs Jones

The House of Lords have found in favour of the taxpayer, Mr Geoff Jones, in the tax case Jones -v- Garnett (also knows as "Arctic Systems").

The Law Lords rejected HM Revenue and Customs’ appeal to tax Mr Jones on dividends paid to his wife, Diana. The judgement marks the dramatic end of a tax case that has gripped accountants and small business owners and dominated tax planning for small and medium sized enterprises for the last four years. The good news is that no further appeals are possible under UK Law.

In their judgement the Lords ruled that:

There was no arrangement in the nature of a settlement when the Jones subscribed for one share each, and set up their company Arctic Systems Ltd
Dividends therefore paid to Mrs Jones should therefore be treated at her own income for tax purposes, and not that of her husband.

Whilst this is very good news for husband and wife businesses, it's still 'watch this space' for the future, to see if the new Chancellor now changes the rules.

Should you have any queries, please contact Steve Cook, Tax Partner on 01753 888211 or e-mail steve@nunn-hayward.com

Please contact us to discuss the above further

Tel: 01753 888211 Fax: 01753 889669
Email: abacus@nunn-hayward.com
Nunn Hayward, Sterling House, 20 Station Road, Gerrards Cross, Bucks SL9 8EL.

Chartered Accountants, Registered Auditors and Insolvency Practitioners. This publication has been prepared as a guide only to topics of current financial and business interest. It is not intended to be a substitute for professional advice. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any material in this publication can be accepted by either the authors or Nunn Hayward. All rights reserved.

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