Beverley Charman has agreed that her record breaking divorce settlement of £48 million was a “fair reflection” of her contribution to her 28 year marriage to the self-made millionaire John Charman. The sum, awarded by the Court of Appeal last week is thought to be the highest ever agreed in England, and confirms the UK as the “divorce capital of the world”.
The ruling follows an earlier House of Lords decision whereby family assets should be divided between breadwinner and homemaker on divorce, and may be portentious, by coincidence the tax case of Jones v. Garnett is being heard by the House of Lords in a week’s time. In Mr Jones’ case, also known as “Arctic Systems”, a central feature is that his wife’s contribution to the couple’s business is perceived by HMRC as insignificant. This is not new thinking, HMRC has long been arguing that “the wife" should only be paid a derogatory amount for any input into a husband's business, normally this equates to the national minimum wage.
Those who are in business with their spouses long recognise the difficulty of accurately quantifying each other’s input. The traditional method of counting hours and multifying by the national minimum wage is simply outdated, and out of touch with what is going on in the divorce courts. A spouse brings added value (or trauma, if you want to be cynical) and cannot be valued as a normal employee; Beverly Charman’s “earnings” as a non-working spouse are deemed equal to her husband’s in divorce, so why should that be a problem for tax?
Tax feature
Disallowing "the wife’s” wages: What’s a commercial rate of pay these days?
