The House of Lords has found in favour of Geoff Jones in the landmark tax case Jones v. Garnett (also knows as Arctic Systems). The law lords rejected HM Revenue and Customs appeal to tax Geoff Jones on dividends paid to his wife, Diana. The judgment marks the dramatic end of a tax case that has gripped accountants and small business owners for the last four years and dominated all recent SME tax planning. No further appeals are possible under UK law.
In their judgment, handed this morning, the lords ruled that:
- The Jones created an arrangement in the nature of a settlement when they planned, and subscribed for one share each, and set up their company Arctic Systems Ltd
- However, the exemption for gifts between spouses also applied and so dividends paid to Mr...