In the recent case of Donovan, the First-tier Tribunal decided that dividend waivers executed by the appellants in favour of their wives constituted a settlement for income tax purposes. Taken together with the decision in PA Holdings, the decision suggests a reduction in the number of strategies available to those running companies who wish to manipulate tax rates through artificial means. Following several recent successes in this area, HMRC might feel emboldened to go further on the offensive against tax planners at both the top and bottom ends of the corporate scale.
