Proposals for Limited Liability Partnerships could become law by the summer following their endorsement by a powerful Commons committee.
Trade and Industry Committee chairman Martin O’Neill predicted a bill would be introduced in April to head off the threat that some major partnerships would become LLPs in Jersey.
Accountants broadly welcomed the committee’s report, saying it dealt with several of their concerns – most notably reassurance that transformation to an LLP would not be regarded as a taxable event, and that eligibility for LLP status would be open to all.
English ICA technical directorate chairman Graham Ward said: ‘We are generally pleased with the outcome. We were pressing for the remit to be expanded beyond the professions because it would promote competition.’
But the committee said ministers should set out the proposed tax treatment in more detail and tighten up key areas of the legislation, including a voluntary scheme of minimum levels of funding in the event of insolvency.
KPMG tax partner Sue Chisman agreed. ‘It sounds as though there is support for this within government which is comforting, but the tax situation still needs clarification. And what does a voluntary level mean?’ she asked. ‘It is rather vague.’
O’Neill was also keen to ensure that partners would retain some liability for their actions. ‘The extent of liability should be commensurate with earning capacity and private worth,’ he said.
DTI ministers are expected to respond within two months and introduce the bill soon after.
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