Genuine contribution to LLP will not trigger TAAR

HMRC has reversed changes made last year to the tax treatment of limited liability partnerships (LLPs). This is in relation to the wide approach it was taking with the application of condition C (the contribution criterion) of the salaried member rules within ITTOIA 2005 s 863A to s 863G. In line with its original guidance HMRC confirms that when determining whether condition C is met capital contribution arrangements which result in a genuine contribution made by the individual to the LLP will not trigger the targeted anti-avoidance rule (TAAR).

In a statement to the Chartered Institute of Taxation the tax authority said: ‘HMRC’s position remains that the TAAR applies if the main purpose or one of the main purposes of the arrangements is to secure that the salaried member rules do not apply.

‘In applying this test HMRC will continue to take...