[Update – 31st March] On the 27th March, the Finance Bill 2014 was published. There is a seperate document that deals with salaried memebrs of LLPs and it is available here.
Originally posted on 30 Dec 2013
The Law Society has added its voice to concerns about the pace and extent of the government’s plans to clamp down on the misuse of LLP membership status to avoid tax.
Following an announcement in the Chancellor’s autumn statement, a draft finance bill published this month sets out proposals for identifying members of LLPs who will be regarded as ‘salaried members’ from 6 April 2014. From then onwards, they will be treated as employees for tax purposes. Operating PAYE by deduction, higher NIC costs – professional firms operating as LLP should sit up and take notice of these changes.
Gary Richards, chair of the Law Society’s tax law committee, described the plan as ‘extremely concerning’ and said the proposals from HM Revenue & Customs ‘do not take account of the variety in which partners operating via LLPs conduct their businesses and could pose very practical difficulties, both for firms and HMRC.
The draft legislation is open for technical consultation until 4 February.