How Do You Solve a Problem Like English Partnerships?
Abstract
English partnerships are transparent for tax purposes, but there is no legislation outlining the tax rules besides a Statement of Practice (SP) (1975). Limited liability partnerships (LLPs) are treated the same for tax purposes but are bodies corporate. This has led to concerns over employment and partnership status being confused and highlights the necessity for specific anti-avoidance legislation for LLPs. Partnerships and LLPs can also be regarded as (bare) trusts for tax purposes, potentially leading to confusion and disputes as to beneficial ownership. These problems would largely disappear if members of LLPs chose to treat their partnership as a separate legal entity for tax purposes. If they did so, LLPs could be subject to corporation tax; otherwise, they and general partnerships should be subject to tailored, dedicated primary legislation governing the tax treatment—instead of that covering a mere SP.
Keywords: partnerships; Partnership Act 1890; SP D12; LLP; beneficial ownership; legal entity; employment.
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