Revenue Victory Will Cost Familiy Businesses
Husband and wife firms will pay more tax after Inland Revenue wins its High Court case
28th April 2005
The Inland Revenue has won a High Court case that could result in around 30,000 small fmaily firms facing large tax bills backdated for years.
It is common practice for a husband-and-wife company to name the wife as a director and pay her dividends, resulting in a lower family tax bill. The Revenue's victory means that all family income in these situations will be judged to belong to the main income earner, meaning the 'loss' of the wife's personal allowance.
Accountants accused the Inland Revenue of moving the goalposts on well-established practices, and said that many companies could be pushedinto bankruptcy by retrospective tax bills.
Read More: Money Guardian
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