HMRC has published its Consultation Paper on partnerships, which can be found at the GOV.UK website. There are two areas being targeted:
- Disguised employment – relating to limited liability partnerships or LLPs only. Partners who are in substance employees, will be treated as employees – leading to a potentially higher tax bills for both “employee” and the LLP;
- Profit and loss allocation schemes – where profits and losses can be shifted between various members of the partnership to minimise the overall tax burden. It is proposed to stop this from happening.
In this article we shall look at the proposed new rules for disguised employment. Profit and loss allocation schemes will be discussed in a later article.