Family run businesses across Cardiff, are being advised by local accountants Graham Paul, to consider their tax position very carefully, following the recent landmark ruling in the Arctic Systems appeal.

Geoff and Diana Jones of Arctic Systems lost their Section 660A appeal, which was heard at the High Court recently. This could impact upon thousands of local business men and women, who could now face huge tax bills.

The court ruled that husbands and wives who both draw dividends from family firms will be treated as if all the income was the main earner's. The move prevents the spouse, who is a director of the company, benefiting from a personal allowance and lower rates of income tax.

John Squire, partner at Graham Paul comments: “The results of this appeal will come as a surprise to many, and it is sure to worry local businesses.

“It seems that spouses are now only allowed to share the risk, but not the benefits and rewards of the business. Many businesses who have legitimately organised their company structures and tax affairs, could now end up owing a possible £10,000. Alternatively they could be subject to an enquiry.”

The case dates back to April 2003 when Arctic Systems, a computer business run by Geoff and Diana Jones, was picked out by the Revenue which claimed the husband and wife team owed £42,000 in tax dating back over six years.

John concludes: “The best advice we can offer in light of this appeal is that family run businesses, should seek professional guidance immediately from their accountants or business advisers, to ensure they are aware of any changes to their tax bills.”

For more information call Graham Paul on 01656 679800.