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Partnership tax rules

Partnership tax rules

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A tax expert recently told me that the falling rate of corporation tax and new tax rules for limited liability partnerships means that accounting firms could lower their tax costs by switching from being an LLP to a limited company. The expert reckons that the LLP tax rules could result in long-term decline for the partnership structure. What do you think? Are any accounting firms thinking about switching to become limited companies? Pros and cons? I'd be interested to hear your views on this.

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By Steve Kesby
23rd Apr 2014 10:36

The fiscal advantage...

... of a corporate shelter has been there for many years. That's why there's also legislation being introduced to attack hybrid structures.

The main con to outright incorporation is that is inhibits succession. To the extent that they don't provide any consideration for it, new entrants will suffer an employment income tax charge on the market value of the stake acquired in the business.

I imagine that any accounting firm that doesn't consider having a means of succession to be important is probably already incorporated (or using a hybrid structure).

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RLI
By lionofludesch
23rd Apr 2014 10:46

Just two

I've was down to two last year.  Just taken a new one on.  Two of those three would save tax by being limited companies - the other one might be better off, it's a more difficult call.

I can't even be bothered to buy the software these days.  I just tell them they have to file by 31 October.

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