HMRC "reviewed" its interpretation of Social Security law and decided that sleeping/inactive partners have always been liable for Class 2 and Class 4 NICs. They have stated that their revised interpretation of the law will be enforced from 13/14 onwards.
We act for a number of husband and wife partnerships which will be affected by this change. In all these cases the sleeping partnership arrangement is genuine. So the sleeping partner has taken no active role in the day to day management and execution of partnership activities, but has provided capital and has a financial interest in the partnership and shares in the profits/losses.
In order for the arrangements to be watertight, we have ensured that the partners have had a simple Partnership Agreement drawn up by a firm of solicitors, which details that one of the partners is a sleeping partner and sets out all the conditions relating thereto.
Is anyone aware of any challenges which have been or will be mounted regarding HMRC's arbitrary decision?