Not only is the Finance Bill 2014 bringing in harsh tax measures for mixed partnerships and LLPs, but the BIS Transparency and Trust discussion paper on UK company ownership is now proposing that LLPs should be prohibited from having corporate members.
The discussion paper is on UK company ownership and proposes a default prohibition of corporate directors in UK companies, and suggests that, for consistency, LLPs should also be included.
If the prohibition goes ahead and applies to existing corporate members, the unravelling of structures will lead to complex legal and tax issues.
The Institute of Chartered Accountants England & Wales has stated that it considers the plans to crack down on the use of corporate partners by LLPs to be “dangerously anti business”. Whilst the BIS is proposing the change from a business law perspective, many LLPs have already restructured this year to ensure they do not fall foul of the new profit sharing rules set out in the Finance Bill 2014 to clamp down on perceived tax avoidance.
We will keep you updated on any further proposals stemming from this possible measure.