E&Y confirms move to limit liability
Ernst & Young will next week take the plunge and announce its intention to register as a limited liability partnership midway through 2001.
In limiting its liability, a firm can protect both partners’ private assets during legal action and make the firm more transparent under law which was passed in July. The accountancy profession lobbied hard for the changes and at one point firms threatened to move offshore if the necessary legislation was not brought forward.
It was thought that measures in last month’s pre-Budget report aimed at preventing the LLPs being used as a tax avoidance mechanism, could put some firms off. AccountancyAge.com columnist Robert Maas, of the English ICA tax faculty, said the rules could scupper take-up of the new structure.
The tax avoidance crackdown is thought to have been prompted by Inland Revenue fears that property investment companies could benefit from the advantageous tax status of LLPs.
But today’s news, confirmed to AccountancyAge.com by the firm, could now open the floodgates with other big accounting and law firms following the move. As many as 90,000 firms have expressed an interest in changing their status to a limited liability partnership, according to government figures.
Links
Pre-Budget statement: LLP avoidance threat
Green light for Limited Liability Bill
Anxious wait as small firms delay becoming an LLP
ASB backs plans to develop accounting rules for LLPs
Resources & Whitepapers
Accounting Software The power of customisation in accounting systems
Parliament moves to close loopholes in limited liability partnership legislation