ARCTIC S660A TEST CASE BEGINS TODAY

The first hearing of a Section 660A case by the Special Commissioners of Income Tax begins at 10:30 today.

The case concerns PCG member Geoff Jones and his wife Diana of West Sussex company Arctic Systems and could have massive implications for thousands of family businesses. PCG is funding the case. The legal and advisory team includes Malcolm Gammie QC and Dave Smith from Accountax Consulting.

Section 660A (S660A), known as the “settlements legislation” dates from the 1930s, though its current incarnation is through the Income and Corporation Taxes Act 1988 and some changes in 1995. Its aim is to prevent re-characterisation of one person’s income as that of another for the purposes of avoiding tax. The Revenue has recently argued that dividend income received by a non fee-earning spouse or other connected person should be taxed as the main fee earner’s income, typically at the higher rate of 40%.

S660A legislation is wide-ranging, and in basic terms deals with situations where income arises from something, for example shares, given by one person to another. This is called a “settlement”; the aim of the legislation is to prevent people from settling their income on another person who pays tax at a lower marginal rate.

The maximum benefit achieved by redistributing the company’s income in this way is obtained when the non fee-earning spouse has no other income at all and his or her entire basic rate tax band is utilised. This gives a maximum possible exposure to S660A of between seven and eight thousand pounds a year or so: a substantial sum.

PCG believes that if both spouses subscribed for shares at the outset, then no gift has taken place and the settlements legislation cannot apply. Both partners take an equal risk on starting the business and are thus morally and legally entitled to equal reward from its success, in just the same way as the owners of any other business.

LAUNCH OF COLLABORATIVE FREELANCING INITIATIVE

PCG's Collaborative Freelancing Initiative (CFI) has been re-launched, and the first meeting will take place at 13:00 on Saturday 26 June 2004, at Atlantic Bar and Grill.

For further information about the initiative and how to register, see the Notice Board.

A HAPPY TALE ABOUT PCG MEMBERSHIP

A PCG member telephoned Law Express via the legal helpline last week for advice about his agency withholding fees. Whilst he was awaiting a call back from the solicitor, he mentioned to the agency that he was seeking advice through the PCG legal helpline. The agency backed down immediately, and the member happily reported back to Law Express that the matter had been resolved.

ANNUAL MEMBERSHIP SURVEY

Several hundred members have already responded to PCG's annual survey, providing valuable feedback and information to PCG's newly-elected board and Consultative Council.

Those members who have not yet done so are requested to participate in this survey, which is anonymous and should take only ten minutes or so to complete. It includes several free text response options, giving members the chance to express their views.

HOTEL DISCOUNTS FOR PCG MEMBERS

Radisson Edwardian will be holding a prize draw as part of its "Let loose in London" campaign, and the prize includes a two-night stay in London with inclusive "attractions". The free draw is open to all, and one can take part by registering at www.radissonedwardian.com/letloose.

Members are reminded that PCG has also negotiated substantial discounts for hotel accommodation throughout the UK, including the Radisson Edwardian chain, details of which are available on the website.

FRAUDULENT EMAILS

Yet another fraudulent email message is circulating, this time purporting to be from Citibank and exhorting the recipient to update account details at a given website address. As with so many of these email messages, it is being sent to people who are not even customers of that financial institution.

Banks and financial institutions do not send unsolicited emails requesting login and account details, and such messages should be ignored and deleted.

COMMERCIAL FORUM PROJECT POSTINGS

For information about the latest job, project, contract and work opportunities, see PCG's Commercial forum and Members' Commercial forum

This week's postings include:

Two project managers and three business analysts for six month contracts.

Competent engineer - fluidics, electromechanical, mechanical, gas flow

Contact database implementation.

REAL LIFE MEETINGS

North Kent - Monday 14 June 2004 19:30

Southampton - joint event with BCS on ISO9001 - Tuesday 15 June 2004 18:30

Gloucestershire/Wiltshire - Wednesday 16 June 2004 20:00

Farnborough - Monday 28 June 2004 19:00

North West Meeting

Reading/Thames Valley

Croydon lunchtime session

Disclaimer - caveat emptor - PCG carries very limited advertising only from known and reputable Affiliates and complementary organisations. Even so, publication of any advertisement carries no implicit or explicit endorsement by PCG.

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