|
Geoff and Diana own and run Arctic Systems, an IT consultancy, where Geoff does most of the fee-earning work and his wife, Diana, lends her support to the business through administration and general assistance.
Advertisement 
It has also taken Geoff and Diana into a set of circumstances they never considered - courts; the media spotlight; Parliamentary debates; awards presentations; - and having to become the unsuspecting champions of married couples in business together.
As well as the 'knock-on effect' the decision has for many people, what has made this story so intriguing, is that instead of it
being Geoff and Diana Jones in the dock and the spotlight, it could have been any one of the tens of thousands of couples who set up their businesses with one party as the major fee earner and the other party providing support.
Both parties reap the rewards of dividends from their jointly-owned company - a practise that was often advised by accountants, and indeed the Government's own small business website.
Disbelief
Geoff and Diana had no reason to suspect they were doing anything wrong. In fact the first they knew was when a tax assessment arrived for £42,000. At first they thought it was a mistake, but a few calls to the Revenue showed that it was serious.
HMRC had used a then little-known provision, Section 660, to try to claim tax on dividends paid to Diana as if they had been paid to her husband - a higher rate tax payer - going back six years.
One of Geoff's first calls was to the Professional Contractors Group (PCG) office. At the time, I was working there and can remember the call. Then IR35 was the flavour of the month and at first, everyone in the office shared Geoff's view that it must be some kind of mistake.
Kevin Miller, an IR35 expert accountant was one of the first to realise the wider implications and PCG decided to support this case. Other small business organisations, businesses and individuals also lent their support.
Mixed feelings
Six years on, four court cases later, and hundreds of thousands of pounds of costs, Geoff and Diana came to the end of that road with a victory. Shout99 caught up with Geoff and PCG's Richard Robson in between interviews and media appearance after the decision.
The atmosphere in their taxi was one of relief that it was over, but also one of anger that they had had to go through this lengthy process at all.
Geoff told Shout99: "It is a great relief after six years that it's all over and we've got the right result.
Advertisement 
"We then discovered that the Revenue were serious and we didn't know what to do. We didn't have that sort of money and we felt completely alone. It's hard to remember that now as this has grown and now we have so many people who have helped us, but at the beginning there was just the two of us and we didn't know where to turn.
"There was no way we could have afforded it and, at one point, thought we might lose our home.
"Even now though, we've got mixed feelings. Yes, we're pleased it's over and we've won the case. It shows that the system works but it's taken a long time and a lot of money. But it still leaves a nasty taste in the mouth.
"Without the support we've received we could not have afforded to defend ourselves. How many people could afford to fight this case? And that can't be right so there's something uncomfortable about the whole process. I almost despair that we had to go to this extent to get justice, many people would have had to cave in."
Future
So what does the future hold?
- For married couples in business together: A general sigh of relief. Although the Government refused to accept this as a test case, in practise it will be difficult for the lower courts to ignore this judgment and virtually impossible for HMRC inspectors to push this point again. So the fear of retrospective tax demands has been removed.
- For HMRC: A possible statement to clarify their position. PCG are already pressing for assurances that this is the end of the road. As costs were awarded against HMRC, perhaps there should be an explanation as it why it risked and spent hundreds of thousands of pounds of tax payers money to chase what ended up as a £6,000 tax bill, if it doesn't have wider implications.
- For the Government: new legislation. It is always possible that the Government could choose to introduce new legislation to tighten up what they could describe as 'a loophole'. But that, at least, would be for the future and freelancers would have an opportunity to rearrange their affairs under a new regime rather than be penalise for their past behaviour.
- For Geoff and Diana Jones: Geoff said that after they have finished their TV and radio interviews, they are looking forward to a relaxing drink with those who have supported them - and then back to a life of anonymity again and running their business as usual.
Further information
Shout99 has written two articles summarising the events relating to Section 660:
You can also read more about the background and the issues at stake in Shout99's Section 660 resource centre
--
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
-
Susie Hughes © Shout99 2007
|
