Tax Investigations Newsflash 20 - Artic Systems

Appeal Dismissed

The much awaited House of Lords judgement in the long running case of Jones v Garnett (also referred to as Arctic Systems) was handed down earlier today. The House of Lords found unanimously in favour of the Jones' and dismissed HMRC's appeal. The salient points from the judgement are set out below:

· The Lords found that acquisition of the share by Mrs Jones constituted a 'settlement' under s660A(1) ICTA 1988 - Mr Jones would never have entered into such an arrangement with an unconnected third party. This provided the required element of bounty to constitute a settlement;

· However, they all also agreed that the acquisition of the share was an 'outright gift' from husband to wife as it was "wholly and substantially a right to income". The arrangement therefore fell within the exception at s660A(6) ICTA 1988.

The full text of the judgement can be found on the House of Lords website at:

http://www.publications.parliament.uk/pa/ld200607/ldjudgmt/jd070725/jones.pdf


Clients and businesses who may have previously settled HMRC enquiries on the basis that the settlements legislation applied may now be able to reclaim any amounts paid.

If you would like to discuss any of these matters in more detail, please contact:

Ronnie Pannu, ronnie.pannu@uk.pwc.com, Tel: 07801 685102
Richard Alderson, richard.j.alderson@uk.pwc.com, Tel: 07739 874043
Iain Sanderson, iain.sanderson@uk.pwc.com, Tel: 07764 902737

Visit our website: www.tax-investigations.com.

Our tax investigations e-newsflashes bring key developments to your attention as they happen. If you would like to discuss the matters covered by this newsflash or any tax investigation issues please call our 24 hour helpline on 0800 328 8215 or email tax.investigations@uk.pwc.com.