Arctic case costs taxpayers over £500,000
British tax payers are facing a bill of over half a million pounds after the Government pursued the Arctic Systems (Section 660) case to the House of Lords in a dispute over £7,000.
The Arctic Systems case, involving Geoff and Diana Jones, received national attention as a test case for husbands and wives in business together, although the Government refused to accept the 'test case' status. The Government failed to convince the courts that the dividends received by Mrs Jones should be taxed as if they belonged to Mr Jones, a higher rate tax payer.
The case went against the Government, who immediately announced they would change the law to prevent this so-called 'income-shifting'.
Costs
Costs were awarded against HMRC, which means the taxpayer will foot the bill. Now, the Professional Contractors Group (PCG) who supported the case and organised the 'fighting fund' for Mr and Mrs Jones, has claimed that the Government doesn't know how much the case has cost.
The PCG believes the total cost of the case will be in excess of £500,000.
John Brazier, MD of PCG said, "It beggars belief that this amount of money could have been spent in pursuit of a £7,000 tax bill. We already know the human cost in terms of the years of stress for Geoff and Diana Jones, and we now know the true financial cost to the British taxpayer."
No records
Meanwhile, the Government has revealed that it doesn't know the full cost of the case, and admitted that no records were kept of the time and overheads relating to HMRC employees who were working on the case.
Questions were raised in Parliament by Mark Prisk MP, who said: "While hundreds of thousands of small family businesses struggle under the weight of red tape imposed by the tax man, the very same organisation appears to be incapable of the most basic record keeping.
"One can't help but wonder if this case and its associated costs starkly illustrate the gap between the Revenue and people who are trying to run businesses properly and efficiently."