Revenue reaps dividends

Fraser, Mary
October 2004
Cabinet Maker;10/22/2004, Issue 5411, p14
Trade Publication
The article comments on a news report concerning an Inland Revenue decision on dividends and taxation that could affect small companies. The case concerns the taxman's treatment of dividends paid by companies jointly owned by husband and wife, and the findings could cost Britain's small family-owned companies anything up to pound 1 billion. The legislation, in section 660A of the Income and Corporation Taxes Act 1988, was designed to prevent a taxpayer avoiding liabilityto income tax and surtax by transferring assets to his family. Section 660A says that any income arising under a "settlement" is to be treated for tax purposes as the income of the "settlor." So where one party makes a "settlement" for the benefit of another, the settlor is liable for tax on income arising from the asset.


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