AN LLP FUNDING facility is to be launched to help address the sudden need for capital from salaried partners at accountancy firms, due to new requirements placed on LLPs by HM Revenue & Customs.
The rules have been tightened around LLPs, which have made it more onerous for partners to retain their status. A three-point check will be introduced from April, which, if partners fail to meet, will see them taxed as an employee.
The government is concerned that limited liability partnership structures allow “disguised employment” to take place, whereby people that are ostensibly partners in fact have a guaranteed income and little decision-making power.
The worry for the government is that the well-established arrangement gives rise to tax discrepancies.
While becoming a full equity partner in an LLP has traditionally been funded through bank loans, some salaried partners at mid-sized and smaller firms are finding banks are reluctant to provide unsecured lending to fund their partnerships.
Independent finance provider Syscap has secured funding from a bank to provide unsecured three-year loans for salaried partners in accountancy firms to meet the HMRC requirement. Additionally, there will be no requirement for partners affected to take a second charge mortgage on their homes, as many banks are demanding.
Syscap CEO Philip White said: “An awful lot of salaried partners are finding that getting bank lending in order to retain self-employed status in time for the deadline is not easy.
“For a lot of these partners, an unsecured loan is a much simpler and more attractive solution, but that hasn’t been easy to find in recent times. That’s the area of need that Syscap is hoping to address with this new line of funding for salaried partners.”
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Let us hope that valuable asset protection vehicles are not made prohibitively burdensome or abolished in the desire to “simplify” IHT