Income shifting: The debate begins as Treasury publishes consultation

Following its announcement after its defeat in the Arctic Systems case, the Government has published a consultation on draft legislation to prevent a tax advantage being gained through "income shifting."

The new legislation is intended to apply from 6th April 2008 to two forms of income:

• profits from a partnership; and
  
• company distributions, most commonly dividends

It is broadly designed to catch married couples or civil partnerships who seek to share business profits that have been generated substantially by the efforts of only one individual in the relations