Law firms consider cash call over partnership tax changes

by Kevin Reed

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13 Jan 2014

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LAW FIRMS are considering going cap in hand to partners in a bid to deal with new partnership tax rules.

Like accounting practices, law firms are facing up to potential changes to their corporate structure in the wake of new partnership rules that look to hit tax avoidance.

Jennie Gubbin, senior partner of Trowers, told The Lawyer that the firm was talking to its participating partners (salaried members) about the tax changes, with a cash call being considered.

A set of tests of employee status have been put forward by HMRC, which include the level of capital they invest and their influence on management decisions. The taxman is looking to introduce the tests to stamp out tax avoidance where partners are in fact disguised employees.

Advisers have warned that the breadth of the tests could inadvertently ‘catch' firms beyond the original scope of HMRC's gaze.

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