Following the landmark victory for the Inland Revenue, Cardiff Accountants Graham Paul & Co are advising family run businesses not to panic.

The judgement against Arctic Systems Limited, has caused worry for those in business with their spouses, however this does not necessarily mean huge tax bills are on their way to every family run company, according to John Squire, partner at Graham Paul.

He comments: “In terms of this legislation it really is early days and the full details of the case have not yet been made available.

“What we can say however is that this legislation does only apply to certain businesses and there is no need for every family run business in Cardiff or the rest of country, to start planning for a huge tax bill.”

The Section 660 legislation relates to husband and wife run businesses where one partner is not active in the business yet both draw dividends so that their combined tax bill is less than if the ‘working’ partner had received all of the dividends. This was the situation for Geoff and Diana Jones who are now being forced to pay extra tax on dividends they received from their company, Arctic Systems.

John continues: “This legislation has been around for a while however with yesterday’s ruling, it seems it is only now beginning to have a real impact on businesses. We must therefore assess its full implication and consider each husband and wife team individually.”

For advice on how the legislation could affect your business, please contact John Squire on 01656 679800 or j.squire@grahampaul.com.