United Kingdom

Key Measure: Personal Tax - Partnership Anti-Avoidance Rules 

KPMG Budget 2013

Description of Measure


The Government announced in the 2012 Autumn Statement that it would be considering whether partnerships would be reviewed as part of the examination of perceived high risk areas of the tax code. 

It was today announced that a consultation document with proposals to address the following issues will be issued in the spring:  


  • The use of limited liability partnerships (LLPs) to disguise employment relationships.


At present there is a presumption that individual members of LLPs are self-employed and are taxed accordingly. There are many factors to consider in determining whether an individual is in fact an employee or a partner and they need to be viewed as a whole. This announcement indicates that going forward LLPs will need to consider such factors more closely to ensure that they can support the member status as being self employed.


  • The obtaining of a tax advantage through the manipulation of profit/loss allocations by partnerships that include a member that is a company, trust or similar vehicle.


There is currently no further information available on how wide reaching this consultation document will be. It is hoped that the Government will target any anti-avoidance measures at artificial arrangements and that the use of such partnership structures which are underpinned by sound commercial rationale will not be impacted.

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