Government's use of sledgehammer to crack nut on LLP taxes bad for law firms
HM Revenue & Customs (HMRC) has embarked on consultations on two different, but allied points, concerning partnership taxation. Taken together, these potentially have huge implications for law firms. The first point concerns the proposal to remove the presumption of self-employment for all members of an LLP. The background to this is the widespread use of LLPs – not only by professional service firms, but also by some businesses where groups of low-skilled workers who would normally be regarded as employees are taken on as members with the apparent intention of avoiding the impact of employer's class 1 national insurance contributions (NIC).
Proposals on self-employment could increase partner costs by 14% at leading firms, writes Richard Mannion
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