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Barbed benefits: Taxes after the end of transfer pricing

Louis Baker suggests some options to manage the short-term impact ?of the termination of tax advantages for service companies

22 November 2013

It was a shock to hear a UK government tax announcement at a Liberal Democrat party political conference. It was even more surprising that the announcement was on the specifics of an aspect of taxation affecting partnerships and LLPs.

On 17 September, Danny Alexander, chief secretary to the treasury, announced at the liberal democrats' autumn conference that the tax benefits that could arise through a partnership or LLP operating a service company would be counteracted. During the speech, there was a strong undertone that professional service firms were conducting underhand, shady tax avoidance tactics which ?the government had only fortuitously stumbled across.

The government announced on 25 October 2013 that it would introduce legislation to stop PSFs from obtaining this tax advantage from operating service companies. It said the legislation was effective immediately, even though it ?would only be introduced in parliament through the 2014 Finance Bil...

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