The Professional Contractors Group has announced that the landmark tax case against HM Revenue and Customs (HMRC) will be heard at the Court of Appeal on 17 and 18 January 2006. The case, which concerns Section 660A, has huge implications for thousands of small family businesses. It relates to Geoff and Diana Jones and their company, Arctic Systems, and has been deemed by the Master of The Rolls as one of significant importance; this means that the hearing must include the Vice-Chancellor, who sits in the Court of Appeal only for the first three days of any given term. About £1bn in annual tax revenues depends on the outcome of the case.
PCG had hoped that the result of the case would be known before the 31 January deadline for Income Tax Self-Assessment returns, but the appeal for expedition was refused.
“We have always argued that this case is of clear and significant public importance, making it unfortunate that we have had to resort to a public appeal to fund it, so it comes as no surprise to us that the Master of the Rolls has taken this view,” said PCG chairman Simon Juden. “Unfortunately, however, his stance does mean that we will not have a result in time for the 2004/5 self-assessment deadline.
“This is deeply troublesome for hundreds of thousands of taxpayers and their advisers who will face further uncertainty about the classification of income and calculation of tax due,” Dr Juden continued. “We call upon HMRC urgently to issue new guidelines regarding the completion of self-assessment returns, and as always our services are on offer to help them draw up such guidelines and mitigate the potential uncertainty for taxpayers.
“Like leading tax barrister James Kessler QC, who has generously supported this appeal, we believe that family businesses are being put in an impossible situation. We would like to see a simple tax system which encourages entrepreneurs and small businesses, including family businesses. We will continue to campaign for clarity, consistency and common sense in regulation and legislation. The prevailing uncertainty does nothing but undermine the self-assessment tax system and erode our competitiveness.”
Commenting upon the appeal, James Kessler QC said, “As a tax lawyer, I strongly believe that the HMRC argument in the Arctic case is simply wrong in law as well as unfair. Although the sum at stake in this, or any similar case, is not sufficiently large to justify an appeal, without a test case to clarify the law, for the benefit of everyone, then bad tax law results.”
PCG is funding the Arctic Systems case, with the support of James Kessler QC, Malcolm Gammie QC, Anne Redston, Accountax, Berg Kaprow Lewis, FSB, JSA, PCG members and members of the public. Donations to PCG’s legal fund are welcome from others who share their concerns.
More on Section 660A
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.