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HMRC have issued a consultation on two aspects of partnership rules, with the intention of removing the presumption of self-employment for some limited liability partnership members to tackle the disguising of employment relationships, and to counter the manipulation of profit and loss allocations.
HMRC have issued a consultation on two aspects of partnership rules, with the intention of removing the presumption of self-employment for some limited liability partnership members to tackle the disguising of employment relationships, and to counter the manipulation of profit and loss allocations.
The changes will take effect from 6 April 2014. Comments on the design and how to ensure the revamped regulations can be introduced without giving rise to uncertainty should be submitted by email no later than 9 August.
Alex Henderson, tax partner at PricewaterhouseCoopers, said the proposals could affect many legitimate arrangements and “cause problems for firms with fixed share equity partners, reducing flexibility to have different categories of partner”.
He added that tax changes would need take account of the new regulatory landscape for the fund management sector set to come into effect in July. Otherwise, partners in the fund management could face the “risk of being taxed on more money than they receive, unless they change their employment status, which might not make commercial sense”.
