It's probably legal to have a company, pay yourself peanuts out of it, regardless of what revenue flows into the company as a direct result of your efforts, then pay out whatever is left over as a dividend.

In this case, HMRC's thrust seems to be that only one of the company's owners is earning money from a third party. I would think there are very few married partners' businesses that work like this. If not for this reason, presumably the HMRC's case would have failed long ago.

If the top rate of personal taxation, including national insurance contributions, was equivalent to the company tax rate, this problem would be avoided. It would then always be better to take the profits as salaries rather than subject them to corporate tax and then pay them out as dividends.

Debbie, Edinburgh, Scotland

Managing a small business is time-consuming; the financial and operational risks are significant, and much of the business-maintenance work of any small business owner is unrewarded. My company turnover 2006-07 was about £120,000, and I managed to draw £10,000 salary and £5,000 dividends last year: my co-Director drew less. We work about 45 hrs per week - each - for 48 weeks per year. That sum (combined) is less than thesalary of an EO (junior level of management) in the Civil Service.
I would, if not managing my business, be claiming benefits: although I enjoy what I do, financially I do not feel well-rewarded, and I don't think that those in the Treasury who structure the taxation of small businesses have the faintest idea of the dynamics of, and pressures on, small businesses - particularly those whose turnover won't support the employment of other people to carry out routine work, to release owners to seek new opportunities.

Tony Wood, Winchester, Hampshire

Labour have never liked small businesses or entrepreneurs, they want to do our thinking for us and any aspiration to become successful is stamped on. This has been the trademark of this government. It is no surprise that the Treasury is pursuing this. Let's hope the Law Lords can see the implications for the country's economy if the ruling is made against the Jones.

CA, Manchester, UK

Well, not only are HMRC making the risk of running a small business not worth the rewards. They have effectively moved the corporation tax rate from 10% to 18% and then to 22%. This means, I do not have the money I would like to re-invest into the business. Don't even mention the R&D allowance because that is an absolute con!!!

I run a small business and quite frankly, I am beginning to think my life would be much simpler if I simply got a job.

Chantel, UK,

Typically of Gorden Brown to go after the small guy !

Saying that this is what you get and expect for voteing Labour !

John, London, Uk

If the Revenue win this case, you can say goodbye to quite a few more engineers than are already leaving this country to work as 'ex-pats' in other parts of the world. They take their spending power and their expertise with them, everybody loses.

The employers who are already experiencing severe resource problems lose, th engineers themselves lose as they have to work sometimes in hostile foreign countries, the revenue who lose all tax revenue, society loses engineering expertise and so on..

Ian Turner, Aberdeen, UK

I'm no expert, and can see HMRC's point of view as far as the salary anomolies are concerned, however equal shares surely mean equal dividend entitlements.

I also don't agree with the "solely responsible” for the income argument. Is HMRC suggesting that all administrative staff should work for noting? Perhaps they may like to start by setting an example!

CoogarUK, Dorchester,

HMRC & The Treasury are surprised that small business is opposed to further disproportionate taxation? This case amazes me and i am surprised that in this climate entrepreneurism is still alive. This Government will not be content until it has destroyed the will to resist of small business in cases such as these..

Louis Hemming, Worcester, Worcs

I wonder how much this has cost to get this far compared to how much the Treasury will actually net in tax revenue. Golden Gordon is determined to make working as miserable as possible in his determintation to squeeze us for every penny we earn.

Nobby Clark, London,

The treasury will loose on the long term. These type of companies will register a holding company in another jurisdiction such as Cyprus whereby the Profits made in UK will not be taxable in Cyprus.

Then the Profits will be repatriated back to the UK as dividends.

This will hit not only the Inland Revenue but other services within the country.

S. Themistocleous, Nicosia, Cyprus