New measures to combat alleged tax avoidance by limited liability partnerships will come in to force on 6 April despite protests from the legal profession and the City, HM Revenue & Customs has confirmed.
A revised technical note and guidance on the 'Salaried members rules' appeared on the HMRC website on Friday afternoon. The rules are intended to prevent the abuse of LLP status by 'disguised employees'.
Critics of the first draft of the rules, including the Law Society, said the new regime treated LLPs merely as tax avoidance schemes, ignoring their legitimate business purposes.
Thinktank New City Initiative warned that the changes could cost the UK revenue by encouraging firms to move away from partnership structures and out of the UK.
Tax experts said that the revised rules appear to have taken account of some concerns raised. George Bull, chair of professional practices group at accountants Baker Tilly, said that HMRC had relaxed its requirements for one of the tests of genuine partnership, that of capital contribution to the business.
'A firm commitment in place by 6 April 2014 to contribute capital within three months will be taken into account,' he said.
While describing the new rules as 'a modest step in the right direction' he said that firms need to act urgently to assess how they will be affected.
Stuart Hatcher, partner at PwC Legal, said: 'The rules have been clarified to some degree, with some helpful examples. It should be easier for true partners to keep their self employed status.
'Partnerships now need to get moving and assess how they might be affected. Many firms had been waiting for the revised rules, and there's now just six weeks until the new regime is in place.'
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