It's a shame that an equally sympathetic approach is not taken towards victims of Tax Credit Overpayments, who seem generally to be a much more impoverished bunch than people paying themselves dividends from their businesses. These victims are often being hounded for repayment of thousands of pounds caused by errors made by HMRC, not because they have committed fraud or neglected to give required information to this incompetent department. It should be noted also that HMRC has received compensation for some of their errors to the tune of about £85 million from their software providers, yet still seeks to recover payments from innocent members of the public years after the event with no prior notification.

Auntieh, Hertfordshire, UK

Well done to those judges and to the couple that trialled the case!! As it is, small business corporation tax has moved from 10% to 18% to 22% in the last 3 years!!

Chantel, UK,

Many husband and wife small "Businesses" couples, with children, pay themselves a minimum reduce their tax burden and then claim maximum child tax credits.

Pete Dawson, London, UK

Certainly a great decision for the taxpayers in that category. It surely is not for the taxman to decide what is adequate salary nor is it the object of tax systems to limit the amount of reserves or earnings. Congratulations.

Enoch , Kampala, Uganda

"estimated that the case would cost the taxman £1 billion a year."

NO NO NO!

The case has cost the tax man £0.00 in "lost tax" - it has SAVED small businesses from EXTRA taxation of an estimated £1bn/year.

Ade, Wallasey, UK

I think it's a little specious to say that the estimated cost to HMRC of this decision is £1 billion.

The number of cases that HMRC currently has and has had in the past is certainly less than 1000, all told. At a maximum of £42k per case that's still a take of less than £42M.

Had the decision gone the other way, it's not clear how much the HMRC might have attempted to collect 'retrospectively' from all the other businesses like Arctic's. That indeed could have run to £1 billion, but is now, fortunately, academic.

In short HMRC may lose the tax they've already collected from those companies who 'caved in' out of the 1000, but that's unlikely to be a tiny fraction of the overall HMRC take.

It's certainly not a 'real' loss to the HMRC.

Steve, Nottingham, UK

A sensible a fair ruling, at last! Well done to Joneses for standing their ground against the vindictive and arbitrary ruling of the Revenue.

HMRC really is out of control these days. HMRC acts as little more than Gordon Brown's own bully boys. They regularly swoop on law-abiding taxpayers with outrageous and unsubstantiated tax demands- they seem to hope that many people will pay up rather than fight an expensive drawn-out battle in the courts.

It is time HMRC were made to follow the letter of the law rather than constantly "interpreting" the law to their own advantage.

Their is nothing wrong or immoral about seeking to reduce your tax bill- as a taxpayer you have a duty to yourself and your family to minimize your liability as far as legally possible. If you pay too much, well the government will only squander it.

David Rochester, Liverpool, UK