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Arctic Systems - where are we now ?

I am about to do the 2006 personal tax returns for the husband and wife of a husband-and-wife company and, having lost the plot with the Arctic Systems appeals etc, I wonder what is the latest ? In my case the wife is a director and the Company Secretary.The have 1 share each. She doesn't do much apart from the accounts and field phone calls. The dividends of £56,000 in total are paid into a joint bank account. She has a salary of £8,660, he has a salary of £9,160. Are we "safe" to split the dividends 50/50 this year ? i.e. £28,000 each.
Stephen Barker


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11th Oct 2006 18:46

Oops !
... or it might even be amended tout de suite ...

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03rd Oct 2006 23:15

As the law stands..


The case is still waiting to be heard in the House of Lords.

We may have a final decision before the end of the year, we may not!

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04th Oct 2006 16:04

Im 100% with Clint
There is no way that the government will allow the law to go in favour of the Joneses. If they win in the HL then the law will be amended toute suite.

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05th Oct 2006 09:48

Have to agree too.
I think the most sensible advice was that arising when it looked like the Jones' were going to lose i.e. sensible shareholding split to reflect the justifiable contribution to the business. I have not advised any of my clients to relax or change anything until we know all of the fall-out from this case.

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04th Oct 2006 06:38

Call me cynical, ...
... but I am not convinced that you should be too relaxed.

Before the Court of Appeal ruling, everyone was going to great pains to prepare arguments showing how their case could be distinguished from Arctic Systems on the facts.

After the Court of Appeal ruling, everyone is going to great pains to prepare arguments showing how their case is on all fours with Arctic Systems on the facts.

The former approach is arguably the safer one, despite the Court of Appeal ruling, as if you successfully argue parity with Arctic Systems who are then scuppered in the Lords then you are scuppered along with them, while all could still be up for grabs on a genuinely distinguishable case.

I would simply add that their lordships in the Court of Appeal considered several factors that they considered relevant to their decision in the case before them, and I would hesitate to comment that the disclosure in the original post is sufficient to express confidence that it follows the Arctic Systems case in every relevant detail.

In practical terms, if Arctic win at the House of Lords I personally predict snowballs in hell before a similar case is challenged. Instead it will be done by legislation. RetroACTIVE of course.

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05th Oct 2006 10:46

I'm with Dean
You cannot be faulted for applying the law as it stands. Submit the 2006 tax returns with the divis split 50/50.

It may be prudent to bear in mind the possibility of a House of Lords reversal or future legislation when advising clients setting up a new company, but the question indicates that this is an existing company. The circumstances certainly appear similar to Arctic Systems; if so, you are safe to comply with the existing Court of Appeal decision. I do not agree that any legislation would be retroactive in the sense that it would apply to transactions occurring before it was enacted.

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