S660A
Encyclopedia
In its United Kingdom
Tax Bulletin 64 (April 2003), the Inland Revenue
(now HM Revenue and Customs) announced new guidance on the "settlements legislation". This is a body of law which seeks to prevent someone (known as the "settlor
") from avoiding tax by reclassifying income as belonging to someone else (known as the beneficiary). The income is then taxed at the beneficiary’s lower rate although the settlor continues to benefit from it. The legislation targets spouses and also parents seeking to divert income via their minor children.
The section of the legislation is 660A of the UK Income and Corporation Taxes Act 1988
. Using the revised (April 2003) interpretation of s.660A, UK HMRC have been targeting businesses set up by spouses where they are aware that income is split between the spouses, and only one of them directly generates that income. In theory s.660A can apply to partnerships as well as limited companies, this has yet to be tested in the UK courts. In 2007 the interpretation was finally rejected by the Law Lords, resulting in the government proposing new leglisation to tackle the perceived abuse. Income Shifting. In the December 2008 pre-budget report, the Chancellor of the Exchequer said he was deferring the introduction of the legislation, and giving no date for its introduction.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
Tax Bulletin 64 (April 2003), the Inland Revenue
Inland Revenue
The Inland Revenue was, until April 2005, a department of the British Government responsible for the collection of direct taxation, including income tax, national insurance contributions, capital gains tax, inheritance tax, corporation tax, petroleum revenue tax and stamp duty...
(now HM Revenue and Customs) announced new guidance on the "settlements legislation". This is a body of law which seeks to prevent someone (known as the "settlor
Settlor
In law a settlor is a person who settles property on trust law for the benefit of beneficiaries. In some legal systems, a settlor is also referred to as a trustor, or occasionally, a grantor or donor. Where the trust is a testamentary trust, the settlor is usually referred to as the testator...
") from avoiding tax by reclassifying income as belonging to someone else (known as the beneficiary). The income is then taxed at the beneficiary’s lower rate although the settlor continues to benefit from it. The legislation targets spouses and also parents seeking to divert income via their minor children.
The section of the legislation is 660A of the UK Income and Corporation Taxes Act 1988
Income and Corporation Taxes Act 1988
The Income and Corporation Taxes Act 1988, also known as ICTA, was the foremost United Kingdom Act of Parliament concerned with taxation until the Income Tax Act 2007 and the Corporation Tax Act 2010. ICTA was enacted in order to consolidate a number of earlier legislative provisions covering...
. Using the revised (April 2003) interpretation of s.660A, UK HMRC have been targeting businesses set up by spouses where they are aware that income is split between the spouses, and only one of them directly generates that income. In theory s.660A can apply to partnerships as well as limited companies, this has yet to be tested in the UK courts. In 2007 the interpretation was finally rejected by the Law Lords, resulting in the government proposing new leglisation to tackle the perceived abuse. Income Shifting. In the December 2008 pre-budget report, the Chancellor of the Exchequer said he was deferring the introduction of the legislation, and giving no date for its introduction.