The Wardman Wire

I see from the BBC that the “Arctic Systems” case has reached the House of Lords.

The Jones’s may have to pay nearly £50,000 extra tax

A case that could affect the taxation of tens of thousands of husband and wife business partnerships will be heard by the House of Lords on Tuesday.

Geoff Jones and his wife Diana are fighting a ruling by HM Revenue & Customs that he avoided tax by paying her in dividends from their firm.

The Treasury have been doing the hokey-cokey with Contractor and Consultant tax status since the current Labour Government came to power in 1997.

In 2001 everyone was forced out of service companies into managed arrangements because “they were avoiding tax”, with weird tests as to who is “deemed” to be what.

In 2007 everyone has been forced out of managed arrangements and back into service companies because “they were avoiding tax”.

Each time they have created a bigger, more complex, more cocked-up, administrative and legal mess. This is the hallmark of anything that is touched by the fingers of Gordon Brown.

In 2007, the latest budget has introduced rules where a £1000 a day consultant working for Cap-Gemini or Logica can treat hotel charges as a business expense, while a one man band doing the same job for less than half the money has to pay for them out of taxed income.

What they actually needed to do was recognise that freelancers are a third group alongside employed and self-employed, which would drain the “are you an employee or not” and “is this a salary or not” swamp where we have all been playing hide and seek - unnecessarily and at huge expoense to the public sector - for these years.

The word on the street is that HMRC are likely to come a cropper.

Gordon Brown and Dawn Primarolo’s tax scams were always going to come home to roost eventually. This may be the first.

Maybe - just maybe - this is the beginning of the end.

And the Jones’ deserve a vote of thanks from everyone who cares that we should have a straightforward and equitable tax system.

Gory details here, if you are interested.

BBC Article.