Thousands of businesses could face huge new tax bills because of an aggressive new interpretation of the controversial tax rule S660A.

In an unexpected move, the Revenue is now targeting much larger companies under a rule which allowed company directors to save tax by paying a dividend to their spouses.

Previously, one-man-band companies would save tax by issuing shares to a spouse and then paying a dividend. The Revenue has already begun reclaiming tax going back 6 years in some cases.

Though the Revenue has recently targeted one-man-bands under the rule it has now focused on businesses using "management companies" set up to run a group of small enterprises – an arrangement common under SMEs. If a spouse holds a share, and receives a dividend from the management company, the Revenue is now looking to recoup the tax.