HMRC said late on Friday 13th January that it planned to petition to appeal the Court of Appeal judgment in the landmark tax case over husband-and-wife companies. Although it was refused leave to appeal to the Lords, it can appeal that judgment itself.

Geoff Jones the director of Arctic Systems, the company at the centre of the case is quoted as being 'relaxed' about HM Revenue & Customs' bid to appeal the case to the Lords. "As far as we are concerned it is done and dusted. We don't feel that going to the Lords will make one iota of difference [to the judgment]." He was 'amazed' that HMRC wanted to take the case further.

The Professional Contractors Group will be funding the appeal, since HMRC insists that it is not a test case and will not put up the cash.

The case surrounds the practice of paying profits earned by one spouse in a business disproportionately to the other through dividends, to maximise available allowances and tax rates.

Many consider the decision of HMRC to appeal as "bizarre" and out of step with current legal thinking. It certainly prolongs the uncertainties surrounding settlements.

The request to appeal will now be heard by the House of Lords Appellate Committee, which is expected to give a decision as to whether leave to appeal to the House will be granted in the next six weeks.

The law as it now stands is based upon the Court of Appeal’s judgment, and not on HMRC’s previous interpretation.

Click here for our previous article looking at the case and decision in more detail.

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