Artic in the Lords today

[Old Greg]

If they win, no problem. What the law, Parliament, accountancy advice and the DTI have been saying for the last 60 years will stand.

If they lose, expect an aspect enquiry for any company where husband and wife own part shares, and how those shares were acquired by the "sleeping" partner, followed by a demand for up to six years back taxation.

Well, I've only been trading 3 months so I'm not too worried.

[malvolio]

Well, I've only been trading 3 months so I'm not too worried.

Lucky you. There are about 70,000 people who will be...

[EqualOpportunities]

Lucky you. There are about 70,000 people who will be...

Indeed...

[ASB]

If HMRC/Gay Gordon had decided to fight it as a test case as a matter of national interest, the costs would be borne by the public purse.

Do you know when HMRC last funded a taxpayer defence - because that is what you are talking about. I entirely agree that it used to happen to clarify a point of law but sadly I don't think it has happened for a long time.

There is a lot of opinion that it should have happened in this case, and I agree with that.

not to mention the tearing noise as the will of Parliament is discarded in favour of short-term gain. So typical NL politics then...

It is not for the Lords to determine what parliament meant, merely what it enacted. The will of parliament only becomes relevant where the meaning of the legislation is unclear (which is a shame, since it was clear this sort of arrangement was anticipated and documented in Hansard).

I guess the will of parliament might potentially be used to undermine the apparently fanciful revenue assertions about interpretation.

I do want HMRC to lose, believe they should and hope they will. I imagine that will then give rise to some tinkering in the legislation that will achieve much the same result as HMRC winning. It'll become known as the "Jones amendment"

[tim123]

, not to mention the tearing noise as the will of Parliament is discarded in favour of short-term gain.

Sorry, but if the HoL decide that HRMC interpretation is correct then it will be the HoL's opinion that the will of parliment wanted this result at the time.

The suggestion that the Will of Parliment supports the viewpoint of the Jones' is an arguement for the defence, it isn't a cast in stone fact.

tim

[malvolio]

But the Chancellor (Geofery Howe) standing up in HoC and stating categorically that the introduction of separate taxation for man and wife will result in "people re-arranging their affairs to take advantage adn this is entirely expected and approriate" is a pretty fair indication that right is with the Jones, not with Gay Gordon. You can't lightly disregard clear statements of intent.

[Old Greg]

On another thread, THEPUMA has said:

'...the exemption in what was s660 requires there to be an outright gift. So you cannot use this exemption unless you issue all the shares to one spouse and then gift some to the other.

Sorry for brief response got to go out but will elaborate later if noone else does in the meantime.'

This is why I was concerned, even if Arctic win. I'm pretty confused by all this.

[ASB]

But the Chancellor (Geofery Howe) standing up in HoC and stating categorically that the introduction of separate taxation for man and wife will result in "people re-arranging their affairs to take advantage adn this is entirely expected and approriate" is a pretty fair indication that right is with the Jones, not with Gay Gordon. You can't lightly disregard clear statements of intent.

Unfortunately the law lords can and do disregard statements of intent. Clearly what the Jones' did is IMO undoubtedly within the intent. That is not the point. The legislation seems quite clear that a gift which is a right to income is clearly caught.

What is at issue is surely whether the gift was a right to income (or that there is no gift involved).

[Troll]

Unfortunately the law lords can and do disregard statements of intent. Clearly what the Jones' did is IMO undoubtedly within the intent. That is not the point. The legislation seems quite clear that a gift which is a right to income is clearly caught.

What is at issue is surely whether the gift was a right to income (or that there is no gift involved).

That assumes the gift is a sure cert for income, there is an element of risk attached, is that not relevant?

[ASB]

That assumes the gift is a sure cert for income, there is an element of risk attached, is that not relevant?

http://www.hmrc.gov.uk/practitioners/guide_sba.pdf

Page 32 contains the wording of the legislation.

Opinion: In order for there to be a settlement there must be some element of gift (e.g. not paying full whack for it - however that might be defined).

Exemptions:

The gift is made to somebody you are not married to (or now in civil partnership with). Para 3 a.

An absolute gift to a spouse (Para 6) is exempt. However if the gift is a right to income it isn't. [Whether this can take in ordinary shares is a matter of debate]

It seems to me that if a shareholding was sold or given to somebody you are not married to then it's safe.

If it is given to a wife then you are safe - unless HMRC can succeed in arguing that the shares are substantially a right to income.

If it is sold to a wife at a nominal value then there is risk anyway because of the element of gift.

If it is sold to a wife at the market value you are then safe (however agreeing what the hell that value should be could be interesting).