HMRC publish revised guidance
HMRC has refused calls to postpone or scrap its controversial change to the tax rules for salaried members of LLPs, but has published revised guidance.
The changes, due to apply from 6 April, mean salaried members of LLPs, or partners, will be taxed as employees. It is being introduced to stop firms using partnership as a mask for tax avoidance purposes.
Helen V McGhee, chartered tax adviser and associate at Squire Sanders, says: “There have been a number of concerns in the way the new rules are intended to operate, which perhaps have not been adequately addressed by HMRC throughout the consultation period.
“The position now is that an entirely innocuous and widely used business model is being attacked (perhaps at the risk of making UK LLPs commercially unattractive for external investors) and firms have less than two months to prepare for some fundamental changes to their tax rules based on some fairly vague guidance materials. It was hoped that the measures would be delayed until April 2015 to allow time to further consider the policy and drafting issues.”
