Income shifting ― where are we now?

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance

Income shifting ― where are we now?

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
imgtext

This guidance note looks at the how the settlement legislation may be applied to income shifting and how this has been viewed by the courts since the 2007 Arctic Systems case.

The settlement legislation is discussed in the Income shifting guidance note and it is suggested that the income shifting note would be a good starting point, before addressing the more specific comments on application of case law and HMRC guidance outlined below.

Overview

Arctic systems was a landmark case, and little substantive has happened in the years following. As this is still a key case, it is considered in detail below after a review of some more recent developments.

Some recent cases

There have been relatively few cases reaching the courts and each has turned on its own facts. They illustrate the likely challenges to income shifting arrangements and suggest a best approach to planning.

In Donovan and McLaren v HMRC, the issue was dividend wavers. Applying the guidelines in the Income shifting guidance note, it would come as no surprise

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+
  • 10 Nov 2025 15:21

Popular Articles

Settlor-interested trusts

Settlor-interested trustsWhat is a settlor-interested trust?A settlor-interested trust is one where the person who created the trust, the settlor, has kept for himself some or all of the benefits attaching to the property which he has given away. A straightforward example is where a settlor

14 Jul 2020 13:38 | Produced by Tolley Read more Read more

Incentives, awards and prizes

Incentives, awards and prizesIntroduction ― incentives, awards and prizesEmployers may use a variety of methods to reward and encourage employees in their work. These are commonly known as incentives, awards or prizes. For the purposes of this note, the term ‘award’ will be used to cover all

14 Jul 2020 11:57 | Produced by Tolley Read more Read more

Exemption ― insurance ― overview

Exemption ― insurance ― overviewThis guidance note provides an overview of the VAT treatment of insurance products and should be read in conjunction with the Insurance ― specific transactions and Exemption ― insurance ― brokers and agents guidance notes.Is insurance exempt from VAT?Supplies of

Read more Read more