Financial Effects of Section 660A

Your amount of exposure to Section 660A depends on your individual circumstances.

However, if you were caught then the amount of extra tax payable can be roughly calculated as follows:

• Calculate how much you have paid by way of dividend to your spouse over the past 6 years;

• If you were a higher rate tax payer for each of those years (very roughly if you earned over £30,000 pa), multiply this figure by 25%

• Add to this figure around 6% per year for interest.

You can also get a rough idea using the Section 660 Calculator on ContractorCalculator.co.uk.

This is the worst case scenario. Note however, that with the Arctic Systems case the Revenue only went back for 1 year, rather than the 6 that they are statutorily allowed.