Legislation intended to crack down on income shifting between spouses has been quietly shelved by the chancellor, who did not mention the delay in his speech.
In a move that will be welcomed by many small businesses, Alistair Darling cancelled the introduction of laws designed to stop small business owners splitting incomes and therefore reducing the tax burden.
Lisa MacPherson, national director of tax at PKF, said: “Had the draft legislation come into force next month as planned, many family businesses would have had to keep considerably more detailed records to prove they were not shifting business income between family members to save tax.”
She added that, should the legislation be introduced in a year, HMRC must set out hard and fast guidelines on exactly what records are needed to establish the market rate of return for each person involved in the business.
“The government needs to consider carefully the policy issues involved – they need to clarify when the ‘income shifting’ rules will be applied,” she added.
In a move that will be welcomed by many small businesses, Alistair Darling cancelled the introduction of laws designed to stop small business owners splitting incomes and therefore reducing the tax burden.
Lisa MacPherson, national director of tax at PKF, said: “Had the draft legislation come into force next month as planned, many family businesses would have had to keep considerably more detailed records to prove they were not shifting business income between family members to save tax.”
She added that, should the legislation be introduced in a year, HMRC must set out hard and fast guidelines on exactly what records are needed to establish the market rate of return for each person involved in the business.
“The government needs to consider carefully the policy issues involved – they need to clarify when the ‘income shifting’ rules will be applied,” she added.
Source: packagingnews
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