Income shifting consultation: Q5

07 February 2008

Categories: Arctic Systems , Jones v. Garnett , Income Tax

In situations where income shifting has occurred, are you aware of any practical problems that business owners may have in making their self assessment returns correctly? If so, in what ways can the Government mitigate these problems?

In the consultation paper the Treasury says:

'B.47 It is the responsibility of individual 1 to determine the amount of income shifted and to make the appropriate adjustments for self-assessment purposes. The legislation deliberately does not prescribe a formula for quantifying the level of shifted income because the facts and circumstances will be different in each case.

B.48 HM Revenue & Customs (HMRC) expects individuals together with their advisers to use their own judgement in working out the level of shifted income. In doing so they must adopt a reasonable basis for any conclusions reached.'

Having listed as relevant factors the level of work carried out the capital introduced and the level of risk undertaken the section concludes:

'B.53 These questions are not intended to be an exhaustive list of the factors to be considered in assessing the amount of...

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