HM Revenue & Customs Consultation Document Poses Significant Tax Challenges for Investment Management LLPs

May 21, 2013

On 20th May, HMRC published a consultation document which proposes major changes to the taxation of partnerships in the UK. The consultation is particularly relevant to investment management LLPs – and especially to those LLPs which include corporate members. The consultation includes two main proposals: first, to treat “salaried members” of LLPs as employees for income tax and national insurance purposes; and secondly, where one of the purposes of a corporate member is to secure a tax advantage, to reallocate LLP profits attributed to the corporate member to the individual members so that all profits are charged to income tax.

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