Following a recent Inland Revenue ruling, many husband and wife firm owners face retrospective tax bills. Simply, the Inland Revenue believe that if a husband and wife (or joint owners) run a business and take equal dividend shares, but the day to day running is not split equally, this equates to tax evasion. The particular case in question is currently appealing the Inland Revenue decision.
Our View
The regulations surrounding the Inland Revenue ruling is not new and it has been enforced before, but not for a very long time. Very often, spouses are paid up to the tax and national insurance threshold to create additional expenses and then receive a share of the dividends. If this is the case for your business, check out your situation or face a retrospective tax bill.
Literally thousands of businesses are potentially affected in the UK.