Ernst & Young could register its UK practice in Jersey by the end of the year, after the island’s MPs passed the long awaited limited liability partnership law last week.
The firm, which has sponsored the legislation through the Jersey parliament with Price Waterhouse, will be able to enjoy asset-protecting LLP status when the law becomes ‘active’ after 9 September.
But the controversial move is likely to be delayed by a dispute with the Inland Revenue and claims that the Jersey parliament had been ‘bought’ by the two firms to gain protection against litigious clients not on offer on the mainland. Nick Land, E&Y’s senior partner, said: ‘Having worked closely with the States of Jersey and Price Waterhouse to bring about the LLP law, we are pleased to see it finally being enacted.?
He added the firm is ‘still actively considering the possibility of registering as a Jersey LLP, but is awaiting the conclusion of the judicial proceedings challenging the Revenue’s view that an LLP should be taxed as a company.?
Land also said a move offshore by the firm failed to ‘address the fundamental need for urgent reform by the UK government of the law of joint and several liability’.
Over the last two years, since the Jersey parliament first indicated it would be prepared to pass an LLP law, E&Y and PW’s enthusiasm for the move has waned.
In 1996, Land and PW’s head of operations, Michael Bishopp, pledged themselves to a future offshore. But recently both firms went cool on the idea.
The Revenue ruled that all offshore LLPs would be forced to pay corporation tax last year. The firms are seeking a judicial review of the decision, which is due to be heard in November.
PW is still interested in offshore LLPs, but its move is in doubt, due to the merger with Coopers & Lybrand.
The LLP legislation had been delayed after clauses were left out of the original law setting out how insolvent LLPs should be administered. The key clauses were passed by MPs last week.
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