Accountants warn of Revenue 'obscure' taxes

The Association of Chartered Certified Accountants (ACCA) has warned that the Inland Revenue is actively seeking 'obscure, and at times questionable', taxable opportunities in small company structures.

ACCA is particularly concerned at the application of Section 660, the so-called married couple's business tax, to the detriment of many more businesses.

Chas Roy-Chowdhury, Head of Taxation at ACCA, said: "The Revenue's current use of Section 660A is just the tip of the iceberg. The Chancellor's determination to make tax collection more efficient, coupled with the need to sustain the Government's spend and save culture, indicates that the Revenue will try to apply it to many more small business set-ups.

"The Government's next move could be to introduce legislation which formally recognises these small company situations as an area of tax avoidance and targets them specifically. Such a development would dramatically affect most small companies and lead to expensive and bureaucratic restructuring. It would also leave many of them questioning whether they should have incorporated in the first place. Put simply, the legislation should not be contemplated at all. If it is introduced, however, it should not be retrospective legislation, as this would leave businesses with extra tax payments of potentially thousands of pounds, which many of them would be unable to make."

The ACCA is the largest and fastest-growing international accountancy body, with over 300,000 students and members in 160 countries and a network of 70 staffed offices and other centres around the world.

Section 660 is the Revenue's new interpretation of an old piece of legislation. It puts at risk family owned businesses where the profits are shared out via dividends and where one party contributes more to the fee-generation than the other.

UKTECH has a free Section 660 resource section and a decision tree for companies to assess if they could be at risk.

Section 660 information centre