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Arctic Systems

27 October 2004 / Peter Vaines
Issue: 3981 / Categories: Comment & Analysis , Arctic Systems , Jones v. Garnett , Income Tax
PETER VAINES takes another look at the decision in Arctic Systems.

Director or Dictator?

ARTICLES ARE APPEARING everywhere about the decision in Arctic Systems Ltd otherwise known as Jones v Garnett SpC 432. The facts are now so well known that they barely need repetition. It is perhaps enough to say that Mr and Mrs Jones each purchased (from company registration agents) one ordinary share in Arctic Systems Ltd a company which then became engaged in the supply of computer consultancy services. Mr Jones supplied the relevant services and Mrs Jones dealt with all the financial and administrative requirements of the company. Mr Jones took a small salary and the profits were mainly extracted by way of dividend. The Inland Revenue argued that these arrangements represented a settlement for the purposes of TA 1988 s 660A so that the dividend paid to Mrs Jones could be treated as the income of Mr Jones.


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