UK Accounting Profession Forms Pressure Group To Fight Section 660A Ruling

by Robert Lee, Tax-News.com, London

06 October 2004

The UK accounting profession is preparing a fight back against a legal ruling in favour of the Inland Revenue in the Section 660A case that could force many thousands of small husband-and-wife-run businesses to pay extra tax, the Daily Telegraph has reported.

To fight the ruling, a new pressure group known as the ‘660A Group’ has been established by a number of representative bodies in the industry, including the Association of Chartered Certified Accountants (ACCA), the Chartered Institute of Taxation (CIOT), and the Institute of Chartered Accountants of England and Wales (ICAEW).

Tomorrow, the group will reportedly take its argument direct to the Inland Revenue in a meeting with the department’s deputy chairman, David Harnett.

Section 660 is an existing piece of legislation which helps determine the principal beneficiary of a business - in other words, the shareholder who receives dividends from company profits at the end of the year.

Under the Inland Revenue’s interpretation of the legislation, supported by last week’s verdict by the Special Commissioners of Income Tax, small firms cannot reduce their tax liability by distributing corporate dividends to both husband and wife.

Chas Roy-Chowdhury, head of taxation at ACCA, has suggested that the ruling could affect up to 800,000 family-run businesses in the UK.

“We want more clarity from the Inland Revenue. At the moment, it has all avenues open to it because the law is so uncertain,” he observed, according to the Telegraph.

“We think many family business owners will be providing information on their self assessment tax returns that they need not provide, and will end up paying too much tax," he added.

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