The Limited Liability Partnership Bill is expected to include major concessions on merger accounting rules when it finally surfaces later this year, writes Lucinda Kemeny.
After disappointing the profession over the timing of the Bill – two weeks ago Accountancy Age revealed it had been dropped from the current parliamentary session – the government has bowed to pressure from accounting bodies and institutes over accounting policy, insolvency and eligibility rules for LLPs.
The lack of provision for merger accounting in the original rules had been a serious sticking point with the English ICA and firms campaigning for its inclusion in the Bill.
But in a response to a trade and industry committee report on LLPs the government has indicated a change of heart.
BDO Stoy Hayward professional practices group lead tax partner Mark Lee said that the absence of merger accounting could have rendered LLPs extremely unattractive.
Acquisition accounting requires goodwill to be amortised, depressing profit figures.
English ICA vice-president Graham Ward said: ‘We are delighted this has been taken up and eligibility for LLP status has been extended beyond professional firms.’
Ward added that the institute was also pleased the government did not intend to penalise LLP members trading with a genuine belief in the future viability of an insolvent partnership, as this would have discouraged people from trading out of insolvency.
ACCA technical director John Davies said that the government had also reacted sensibly by including the ability for LLPs to revalue their assets and credit surpluses to a revaluation reserve, which he said clarified an area of uncertainty.
Government insiders said they remained hopeful of introducing the Bill in the current session, but it is widely expected that it will not find parliamentary time until the autumn.
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