In the Budget statement the government announced that it would “consult on measures to:
- remove the presumption of self-employment for limited liability partnership (LLP) partners, to tackle the disguising of employment relationships through LLPs; and,
- counter the manipulation of profit/loss allocations (by both LLPs and other partnerships) to secure tax advantages”
and promised a consultation document “in the spring”, with legislation to be introduced in Finance Bill 2014.
It’s slightly surprising therefore that although the CD hasn’t appeared yet, the Queens Speech nonetheless included the promise of a new National Insurance Contributions Bill which will provide inter alia for the removal of the presumption of self-employment for LLP members. “Consultation” evidently means something different to government than to the rest of us.
Hitherto it has been reasonably simple for businesses with high-earning employees to avoid NIC by structuring the business as an LLP and introducing key employees as members. It looks as if this simple strategy will no longer work after 2014 and that it will once more be necessary to consider carefully the status of individual members as employed or self-employed. In some cases – for example where the LLP profit-sharing arrangements are substantially on an “eat what you kill” basis – it may be that the current self-employed status of members will be safe or can be secured with few changes. In others, more fundamental changes may be required. For more, contact your usual contact partner or David Whiscombe.