Partnerships – removal of assumption of self-employment

Partnership tax rules have been a feature of many avoidance schemes closed down by HMRC in recent years. The Government announced in Autumn Statement 2012 that it would consider whether partnerships should be reviewed, as part of the rolling examination of high risk areas of the tax code. In the Budget 2013, the Government has now announced that it will consult on measures to:

  •  remove the presumption of self-employment for limited liability partnership (LLP) partners, to tackle the disguising of employment relationships through LLPs; and,
  • counter the manipulation of profit/loss allocations (by both LLPs and other partnerships) to secure tax advantages.

It is intended that a consultation document will be published with proposals to address both issues in the spring of 2013, with legislation expected to be introduced in Finance Bill 2014.

The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice.  No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction.