Arctic case to be appealed

The landmark Section 660 case involving Arctic Systems will go to the Court of Appeal.

The case, involving husband and wife Geoff and Diana Jones, was originally heard by the Special Commissioners in June 2004 and appealed at the High Court in March this year - both decisions went in favour of the Revenue.

The formal judgment, which has since been handed down, agreed with the views of Special Commissioner Dr Nuala Brice, who had asserted that Diana Jones's dividends were in fact income arising under an arrangement and that the exemption in Section 660A (6) should not apply. It also focused on the issue of market rate salaries.

The High Court defeat sent shock waves through the small business community who feared that tens of thousands of husband and wife businesses could face huge tax bills.

Announcing the decision to appeal, Professional Contractors Group (PCG) chairman Simon Juden said: "We believe that this judgment undermines the self-assessment tax system by leaving a host of questions unanswered. It could affect hundreds of thousands of small family businesses who've shared the risk and hard work of running a business, expecting to share in the rewards.

"We are campaigning for clarity, consistency and common sense in regulation and legislation and are pleased to have the generous support of leading tax barrister James Kessler QC, who believes that family businesses are being put in an impossible situation."

The case has been funded by the PCG, a number of other organisations and individual donations.