With just two weeks to go before the High Court appeal, a leading tax lawyer has explained his reasons for supporting the Professional Contractors Group (PCG) in its backing of the Arctic Systems case.
Geoff and Diana Jones, of West Sussex company Arctic Systems, narrowly lost their landmark Section 660A case at the Special Commissioners when the two Commissioners could not agree and one used her casting vote in favour of the Inland Revenue. The outcome has considerable implications for hundreds of thousands of husband and wife businesses.
James Kessler QC, a leading tax barrister, believes that small family businesses are being put in an impossible situation. “I think that the Revenue argument in the Arctic case is simply wrong in law as well as unfair. It would also be extremely difficult to operate because the Revenue is asking people to value the contribution of their spouse,” he said. “That is an almost impossible exercise and will vary from year to year, depending on individual circumstances.
I think that the Revenue argument in the Arctic case is simply wrong in law as well as unfair.
James Kessler QC
“In any one particular case, the amount of tax is not going to be large enough to justify an appeal,” he continued, “and if people cannot afford to challenge the Revenue, then bad tax law results. As a tax lawyer, I want to see the tax system operated in a way that is right in law, and fair and workable in practice. The Revenue’s ruling affects people who cannot afford to appeal on their own, so there needs to be a test case to clarify the law, for the benefit of everyone.”
Expressing his thanks, PCG chairman Dr Simon Juden said, “We are extremely grateful to James Kessler QC for his generous support, and to the Federation of Small Businesses, Berg Kaprow Lewis and JSA for their donations. I would also like to extend special thanks to all the PCG members and members of the public who sent contributions to the legal fund. Without this funding, we would not have been able to take the case further.
“We are determined to achieve clarity in this matter,” he continued, “and remain committed to supporting family businesses and passionate about the right to transparent and easy taxation at a fair rate for people who choose to work for themselves. Where families share risk, they should also be able to share reward.”
The case will start on 15, 16 or 17 March 2005 and is likely to last three days. The legal and advisory team will include Malcolm Gammie QC and Dave Smith from Accountax Consulting.
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.