HMRC consultation on partnership & LLP tax

HMRC consultation on partnership & LLP tax

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As HMRC’s consultation on partnership/LLP taxation draws to a close, BDO’s Colin Ives calls on AccountingWEB readers to have their say on this important issue.

HMRC proposes removing the automatic presumption of self-employment for LLP partners to prevent ‘disguised employment’. Instead, it proposes two tests to establish if an individual member is, in reality, a ‘salaried partner’ and therefore liable to PAYE, employers’ and employees’ NIC.  HMRC also believes that artificial profit/loss allocation is used for tax avoidance where partnerships with mixed membership (individuals and companies etc) allocate profits or losses between members to reduce or defer tax. Partnerships where members have differing tax attributes (e.g. exempt and non-exempt partners) and income streams are transferred are seen as a tax risk.

Although badged as anti-avoidance proposals, the changes suggested in the consultation document are expected to substantially affect the amount of tax that the partners of some partnerships and LLPs pay.

Do you think the proposals are a sensible move or a sledgehammer to crack a nut?  Please let us know by completing our quick and confidential 60-second survey at www.bdo.co.uk/partnershiptax2013.    

The deadline for survey responses is close of business on Friday 2 August.  We will make sure your voice is heard by incorporating your answers anonymously in BDO’s formal response to the HMRC consultation and sharing a summary of our findings with you and other AccountingWEB users.

Read our recent AccountingWeb article for more information about the partnership/LLP consultation.

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By the_Poacher
26th Jul 2013 16:02

Genuine LLPs
Do genuine LLPs not set up for tax avoidance have anything to fear from this?

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