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Geoff and Diana Jones, who own and run IT consultancy, Arctic Systems, have been supported in their legal battle by the Professional Contractors Groups (PCG) and other interested parties. Richard Robson from the PCG has been with them every step of the way and here, he provides his view of the past six years and Arctic's journey to the highest court in the land.
Richard Robson writes:
Geoff and Diana Jones, PCG's very own Mighty Minnows face another day of destiny when the latest, possibly final sequel to the Arctic Systems story premieres at the House of Lords, the highest Appeal Court in the land.
It's been a perilous journey but PCG has been with them most of the way and we will be there to cheer and support them at the end.
A postman comes knocking
Was it really autumn 2001 when the Jones received that first crucial letter from the Inland Revenue? No-one likes brown envelopes and contractors know they rarely contain pleasant surprises, but imagine how you'd feel to receive a completely unexpected demand for £42,000 additional taxes whilst pouring your cornflakes.
Geoff and Diana felt angry and they've stayed angry for six years so far; what a good thing for so many husband and wife business partnerships that they have too. Their now infamous S660 issue made no sense to them at the time and it seems it has made very little sense to anyone else outside ranks of officialdom since.
What is S660?
The Arctic case springs from part of the 1988 Finance Act which passed onto the statute books in 1989 (the Budget was late in the year in those far off days). It was intended to supplement and clarify long standing legislation to prevent highly paid actors and company bosses syphoning off funds to their less industrious relatives and exploiting their unused tax allowances.
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Nonetheless, when the public wised up to Gordon Brown's many early stealth taxes and rendered further ones politically undesirable, the Inland Revenue decided that a creative approach to existing legislation might reap rewards.
S660 was deemed fit for purpose and it is alleged that a small experiment began out of a Bootle tax office which had already been testing the boundaries of this particular law for some considerable time.
Early days of the Arctic Systems case
An angry Jones has proved to be a very determined Jones. They dug in their heels, they contacted their MP who was the contemporary Shadow Chancellor:They consulted experts and engaged the services of Qdos Consulting who explored the conventional negotiation channels for them; They declined an early Revenue hint that they might compromise on the contents of their deposit account plus six months to pay a nominal additional balance; They joined the PCG.
Arctic first appeared on the official PCG radar during 2002 and we maintained a watching brief whilst correspondence dragged on and on into 2003. During my own spell as PCG Director responsible for Case Law we formally adopted the case and worked with the Jones, Qdos and other partners to determine the best strategy. Geoff and Diana were clearly up for a fight and following the involvement of Accountax and the battle hardened Dave Smith, our newly appointed Legal Director (Dr) Simon Juden announced to the PCG and the wider world that PCG would be backing Arctic in taking the case to the Inland Revenue Special Commissioners.
The rest is history
Arctic lost at the Special Commissioners, following a highly controversial use of the casting vote. We appealed to the High Court and lost again when Mr Justice Park apparently ignored every significant argument. We appealed again and three Court of Appeal judges found in favour of Arctic Systems.
Such was the joy at the time that even Simon Juden was rendered almost speechless. Subsequent analysis of the judgement shows that the judges found unanimously against the Revenue on every single point of substance. It wasn't just a victory, it was a whitewash and we sat back and waited for common sense to prevail and the Revenue announcement that this was the end of the line. How wrong we were...
The House of Lords appeal
The Revenue has chosen to take this case to the highest possible court and up to three days of legal debate commence at 10:30 Tuesday 5 June 2007. With such a stunning result at the Court of Appeal, the odds must be stacked in favour of the minnows, but the House of Lords is unbroken ground for PCG and no one knows what surprises lie in store. For those of us who have been involved from the outset, those three long days will be fascinating.
An Appellate Committee usually consists of five law lords (but sometimes seven or nine). Proceedings are much less formal than in the lower courts. The five law lords sit round a horseshoe table and the senior law lord present acts as Chairman. They do not wear robes. Counsel appear in wig and gown at the Bar across the centre of the room, at which stands a lectern. Counsel for the Appellant is heard first, then counsel for the Respondent and finally counsel for the Appellant in reply.
There are frequent questions from the law lords as arguments are developed and challenged. The length of hearing varies but the average is two and a half days....Anyone may attend judicial business without prior arrangement. A person interested in seeing the law lords at work should tell the policeman at the public entrance to the Palace of Westminster and, if the law lords are sitting, they will be directed to the right place. A notice at St Stephen's entrance shows what judicial business is going on each day; as does www.parliament.uk. The case commences at 10:30. The hearing is in committee room one. ID such as passport is required to get in.
According to the official website:Judgment is usually given at 9.45am on a Thursday morning a few weeks after the hearing.
Richard Robson
Professional Contractors Group
Editor's note: Richard will be in court each day with Geoff and Diana Jones and has kindly agreed to summarise his views on the case for Shout99 readers....or for those in the vicinity of the Red Lion in Whitehall, you can expect to find interested parties gathered there after close of formalities each evening.
Good luck and best wishes to Geoff and Diana and the PCG team.
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Susie Hughes
The Editor
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