S660a Options for Contractors
Now that Arctic systems lost their S660a, IT contractors must now look at the options and decide which one to go for.
We get an expert analysis here.
S660a – Information Sheet
Arctic Systems Introduction
I‘m sure you will have read a lot about the Arctic Systems case in the press. It has potential effects on the small family businesses.
They only released the written judgement this week. So up to now it has been very difficult to issue opinion and recommendations.
There also remains a complication that the case may go to yet another appeal through the High Court. This will delay any definitive decisions for at least a further 6-9 months. As a result any definitive advice would not be a good idea as it may not be appropriate depending on which way the final verdict lands.
Given that the High Court has held the decision of the Special Commissioners (i.e. they‘ve won twice) and based on the written judgement from the Arctic case together with details released from David Smith of Accountax, it is safe to say that HMRC won this one without breaking sweat.
Options for Affected Companies
There are several S660a options open to affected companies as shown below:-
– Concede – basically roll over and take what‘s coming, pay the tax and have done with it. This would be extremely expensive! At this moment in time, it is not the best option given another appeal is in the wings. Many of those who are risk averse would see this as a good idea. However, in such cases, S660a may not apply. You could be throwing funds away unnecessarily. Seek professional advice before doing anything drastic;
– Ignore the legislation – given that they inspect only 2% of taxpayers in a year, the likelihood of enquiry is very small. However, should they catch you, it could be costly – basically it is the worst option;
– Slight improvements to working practices that would mean paying slightly more tax and make the company a less attractive target;
– Complete restructure of the company, involving share transfers, etc. Administration heavy but again would make the company a less attractive target going forward;
– Start over.