Press Release

The end of independent taxation? Income shifting will force spouses to share financial details

29 February 2008

The Government’s approach to income shifting proposals are not conducive to effective, sustainable, transparent and robust policy formation, says ACCA (the Association of Chartered Certified Accountants) today in a letter to the Treasury.

The accountancy body is also worried about the implications for financial confidentially, which is still an issue for some spouses who are not prepared to share their income details.

Chas Roy-Chowdhury, head of taxation at ACCA, says: "We are concerned that proposals could bring about the effective end of independent taxation. Whether they want to or not, spouses will need to discuss openly with one another what income and taxes each is attributed in order to ensure they are not caught by the legislation."

He adds: “The Government now seems to be proposing a much higher burden of proof and record keeping requirements for family businesses – this is an especial burden for small business."

ACCA’s letter to the Treasury advises not to enact legislation in this area. Chas Roy-Chowdhury concludes: "At the very least the legislation should be deferred until all the issues which are resolved. If the Government does decide to go ahead then we believe the result will be that those taxpayers who are professionally represented will almost certainly seek to ensure that they document appropriately, take out insurance cover and if challenged use help from specialists to argue their case. It will only be unrepresented businesses and the ill-advised who will be at risk.

"The net result would be that there would be very little additional exchequer gain from this measure, yet it will create significant burdens on small businesses."