MANY small family businesses in Salisbury could be charged back-tax and penalties costing thousands of pounds because the Inland Revenue is changing the way it applies the rules to such companies.
Andrew Lines, tax director at accountants Smith & Williamson, which has offices in Salisbury, said it was "a matter for concern that this new interpretation of the rules can be applied retrospectively".
"Husband-and wife com-panies tend to be most at risk from this new interpretation. These family businesses are frequently set up so that the wife, who may provide book keeping or administrative support, for example, is also a shareholder and receives dividends on which she typically pays tax at a lower rate than her husband.
"The Inland Revenue is now arguing that it can re-allocate income paid to the lower rate taxpayer and treat it as if it had been earned by the higher rate taxpayer this results in a higher overall tax bill."
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