Section660 win for Qdos

A freelance IT contractor has been subjected to a Section 660A investigation and won. Section 660 - the so-called business tax between married couples and partners - has been the subject of much controversy and uncertainty since the Revenue started clamping down on what it perceived to be a 'loophole'.

This case concerns a small family company, with an annual turnover of a little over £100,000, run by a husband and wife who are the only shareholders. The investigation began in September 2003, with an enquiry into the wife's personal Tax Return. The Revenue's questions originally concerned remuneration, then quickly turned to investment income. The company's accountant suspected that a Section 660A investigation was afoot, and he advised the Company Director to consider dissolving his company and forming a new company with a different share structure. This was a signal for the director to contact Qdos to claim on his tax investigation insurance policy.

The case was allocated to Keith Preece, one of Qdos' Senior Tax Consultants. He announced his involvement to the Revenue and set to work. Following a period of consultation with his clients, Keith wrote to the Revenue, providing the information that the Revenue had requested, concerning the wife's shareholdings and remuneration, and giving the Revenue a comprehensive account of the wife's involvement in the business.

Two months elapsed and Keith had heard nothing more from the Revenue. He sent a reminder. Back came a letter: the case had been submitted to the Inland Revenue Trusts Director's office at Bootle. This is where the Revenue's Section 660A "Technical Adviser" resides. Another fortnight passed by. Then the Revenue wrote again: the investigation had been dropped. Relief all round!

The whole investigation had lasted just seven months. However, this was a very trying time for the husband and wife concerned. They were busy providing services to their clients, did not want to go through the hassle of closing down their company and setting up another, and the Revenue investigation was just a millstone around their necks. Fortunately they were insured with Qdos Consulting.