Family firm wins test case over tax demand

The House of Lords has ruled against HM Revenue & Customs in a landmark tax case against a husband-and-wife business partnership accused of using dividend payments from their firm as a tax avoidance mechanism.

On Wednesday, the Law Lords ruled in favour of Geoff Jones and his wife Diana and their IT consultancy business Artic Systems, seven years after the HMRC began its investigations.

Mr Jones, an IT consultant, was the sole director of the company and his wife acted as company secretary and looked after much of the financial administration of the company. Each held one share in the company and were paid a small salary and both received dividends from the company when it had sufficient profits to pay for them.