Examining the proposals on partnerships and LLPs

In Budget 2013, the government announced that it would review the use of partnerships in tax planning. It has now proposed legislative changes from 6 April 2014 to block the manipulation of profit and loss allocations to secure a tax advantage. It has also now published a formal consultation on anti-avoidance legislation for LLPs to be effective from 6 April 2014. The proposals will affect many LLPs which have a wide range of partners with differing financial entitlements – particularly those with ‘fixed share’ partners or ‘junior’ partner ranks. This will affect many firms in the asset management, hedge fund and private equity sectors.