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LLP stakeholders: Financial reward and ownership under the Finance Act 2014

William Wastie explores the options under the Finance Act 2014 for UK law firms looking to change their reward and ownership structures

20 August 2014

Over the past six months, much of the emphasis in UK firms operating as limited liability partnerships (LLPs), particularly those with fixed-share partners, has been on looking to ‘fail’ condition C of the new Finance Act 2014 in terms of maintaining the self-employed status of their partners for tax purposes and ensuring those partners have sufficient capital at risk in the business. This has been due to most advisers considering condition C as the surest route to establishing with HMRC agreed self-employed status and hence maintaining the National Insurance Contribution (NIC) levels of both LLPs and their members.

The importance of maintaining this tax neutrality and the unedifying rush by HMRC to have the provisions in place from 6 April 2014 (notwithstanding the complex overplay between partnership, LLP and employment law) has necessarily prevented many from considering the other options availabl...

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