Six tax professional bodies have expressed disappointment at the new Inland Revenue guidance on the settlements rules, published last week, and have published their own guidance note on the approach members should take when completing tax returns.
It is a joint paper on behalf of the CIOT, the Tax Faculty, the Association of Chartered Certified Accountants, the Institute of Chartered Accountants of Scotland, the Association of Taxation Technicians, and the Association of Accounting Technicians. The Federation of Small Businesses has also voiced support for the guidance.
CIOT president John Beattie said: "The professional bodies have been requesting further and better guidance from the Inland Revenue on key issues for over a year. The 'new' guide to the settlements legislation, published last week, consists almost entirely of repackaged earlier comments and does not address the key areas of uncertainty which we have repeatedly highlighted."
After all this time we hoped for more than a sunburnt zebra
John Beattie - CIOT President
He added: "We have read it from cover to cover, but it deals only with the black and white and not with the important grey areas, which remain just as murky as before. After all this time, we hoped for more than a sunburnt zebra."
The professional bodies said that in many cases it would be "far from clear" whether or not the settlement provisions applied and, if they did, the extent to which they applied to reallocate income from the recipient (of a dividend, for example) to the deemed settlor.
They concluded: "In view of the fact that the Revenue has not provided the level of guidance we had requested on the grey areas, members will have to make their own decision on the applicability or otherwise of these provisions and take such further advice as they deem appropriate in the circumstances."
Editors note (Feb 2012):
The original settlements legislation dates back to the 1930s and was subsequently updated first in 1988, when it became the more familiar Section 660. It was changed again in 2005 when it was updated and rewritten into its current form as Section 624 of the Income Tax (Trading and Other Income) Act (ITTOIA) 2005. See more information on the current settlements legislation.
Published: Wednesday, November 24, 2004
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