They obviously don’t trust what IT Contractors get up to with their spouses as regards splitting dividends. What about a financial wife-swap?
Once again IT Contractors and small businesses were at the wrong end of a hiding from the Chancellor.
He obviously doesn’t trust the relationship they have with their spouses financially. He considers one of them to be just sleeping partners in the business.
Helping With the Accounts
No matter if the partner is helping with the accounts, the sales, the marketing or the purchasing, the Chancellor considers them to be ‘at it’ and has produced rules, after HMRC’s massive defeat by Geoff and Diane Jones of Arctic Systems aided by the Professional Contractors Group, so that they can’t split dividends.
The Chancellor reckons that they are just trying to save taxes. He reckons that it is a carve up to stop the taxman getting his fair slice of the pie.
Normally they assume that people are acting honourably. The ones that they think are not acting honourably, they investigate. If they are acting against the law, they charge them or at least make them pay their taxes with penalties.
How does the Chancellor or the taxman know who are cheating the system and who are genuinely splitting dividends with someone who is doing useful work for the company?
If they have suspicions that someone is abusing the system then they should do what they normally do and investigate them.
Cheating the Treasury Out of Taxes
However, the Chancellor obviously believes that the whole lot of us are ‘at it’, that we are cheating the Treasury out of taxes en masse and that as a group we are guilty and as such each and every one of us is to be penalised.
However, if we split the dividends with someone else’s wife or husband who did work for the company along the lines stated above then that would be all right.
What is to stop two husbands just swapping their wives financially and overcoming this mass guilt legislation?
When IT Contractors Split Their Dividends
Indeed it might be a good idea to set up a central wife-swapping scheme. IT Contractors can tap into when they want to split their dividends with someone doing some useful work for the business.
Perhaps the PCG could offer a financial wife swapping service along with their membership. You would ‘get all the insurance you need, along with a free financial wife, along with your annual membership fee’.
One other point. If this spouse is looked upon as someone who is not really contributing to the business at all, and that it is just a con to say that they are, how come they are entitled to a big chunk of the money from the business in the divorce courts?
Once again it is ‘you get the worst of both worlds’ for contractors.