Despite losing in a complex and high profile case in the House of Lords (Arctic), HMRC are pursuing family run businesses that they believe are evading tax by breaking the rules on income shifting. This is particularly relevant to businesses that are run by husband and wife teams. The problem arises where there has been an allocation of shares that pay dividends but the consideration for those shares do not reflect the time that the shareholder puts into the business.
HMRC are planning to investigate more husband and wife type companies and will no doubt be cracking down on small business people that they feel are evading tax. As the only source of income may be the employer company then this could in turn place pressure on the business cashflow. If directors are found to be breaking the rules then the HMRC are likely to be firm in collecting unpaid tax. This in turn could push businesses into trouble.
If HMRC are threatening actions to collect taxes, or if the business has unpaid PAYE, VAT, corporation tax and is threatening legal action to wind up the company then directors should act quickly. Contact KSA Group on 0800 9700 539 if you need some advice on dealing with company tax problems.