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OTS makes further call for evidence on partnerships review

Also comments on HMRC's progress in implementing recommendations 

25 July 2014

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By Manju Manglani, Editor (@ManjuManglani)

The UK Office of Tax Simplification (OTS) has today published a further call for evidence on its review of partnerships.

In addition, it has given an update on the progress made by HMRC in implementing some of the OTS's short-term recommendations.

The call for evidence further discusses how to develop the medium and long-term areas set out by the OTS in its interim report.

In reviewing HMRC's responses to the 'short-term fixes' it suggested, the report says: "The OTS feel the publication of the draft consolidated partnership manual on the HMRC website in April 2014, will potentially save these businesses an immense amount of time and associated costs in trawling the guidance."

The OTS has noted that an additional five of the remaining short-term issues raised will be clarified within this new manual:

  1. partnerships' eligibility for entrepreneurs' relief, particularly regarding possible relief on subsidiary companies held by an LLP;

  2. stamp duty land tax liabilities following changes in the profit share ratio;

  3. inheritance tax for partnerships;

  4. VAT registration involving limited partnerships and joint ventures; and

  5. VAT grouping for LLPs

However, it has added that "the main exception to this general taking forward is the idea of creating free software to enable the smallest partnerships to file electronically without having to buy a commercial package.

"HMRC explain the reasons for this and we are sympathetic to the cost issue in particular. However, we, and no doubt many small partnerships will find this disappointing: we would hope that future digitisation in this area may help".

The report considers how the medium and long-term areas it identified previously can be developed. This includes: developing education for the smallest partnerships; whether partners should be able to include partnership expenses on their personal returns; and how best to reduce difficulties surrounding stamp taxes and double taxation treaties.

A final report is scheduled for publication in late summer 2014. Recommendations in the report will be made to the Chancellor of the Exchequer in time for consideration for the Autumn Statement.

 

 

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