Income-splitting arrangements can still be effective for married couples, but they must be implemented carefully, says Peter Rayney.

Many feared that HM Revenue & Customs would be quick to impose legislation to counter income-splitting arrangements in owner-managed businesses following its defeat in the landmark Arctic Systems case in 2007 – (strictly referred to as Jones v Garnett [2007] STC 1536). Some two years on, however, the law still stands where it was when the House of Lords ruled that Mr Jones’ arrangements for routing tax-efficient dividends to his wife were effective.