High-earning lawyers of large firms are to be affected by new tax laws, following the announcement in the Autumn Statement two weeks ago. In a bid to tackle tax avoidance, members of Limited Liability Partnerships are to be identified as ‘salaried members’ for tax purposes and will considered as employees from April next year. A draft finance bill has been published this week to set out these new guidelines.
Baker Tilly has described the new law as causing ‘unnecessary complexities’ for businesses, with a partner from Crowe Clark Whitehall stating these plans as ‘dramatic’. It is warned that members who are not very involved with management, have little capital invested and have high remuneration packages should be prepared. It will likely affect UK partners of large US firms.
HMRC have been criticised for imposing rules which target and essentially groups a wide range of businesses and partnerships together, instead of targeting specific areas. This has given partnerships an unfair disadvantage when comparing to company structures.