Autumn2013 Dates for 2013


The City of London Solicitors’ Company


Mon. 4th Nov. General Purposes Committee, at the Company’s offices at 4 College Hill, EC4 at 5.00 p.m.


Sat. 9th Nov. Lord Mayor’s Show


Mon. 18th Nov. * Court meeting at 11.00 a.m. followed by luncheon at 1.00 p.m.


Wed. 27th Nov. Livery Dinner, Clothworkers’ Hall at 6.45 p.m. Liverymen and Guests. D.


The City of London Law Society


Wed. 27th Nov. Committee of the City of London Law Society at 11.00 a.m. followed by a Carvery Lunch at 1.00 p.m. at Butchers’ Hall, Bartholomew Close, EC1.


* At Cutlers’ Hall, Warwick Lane, EC4.


revenue Law Committee


The Revenue Law Committee continues to focus on commenting on tax matters relevant to the work and clients of City firms, in particular, responding to HMRC and HM Treasury consultations.


It has been a busy period for the Committee. We responded to four HMRC consultations:


• Partnerships: A review of two aspects of the tax rules;


• Strengthening the Code of Practice on Taxation for Banks


• Reform of Close Company loans to participators rules; and


• Modernising the taxation of corporate debt and derivative contracts;


Copies of all the detailed submissions are on the CLLS website. A summary of some of the key points made in our responses to the first two of these Consultations is set out below.


We will report on the response to the corporate debt and derivatives consultation in the next edition.


HMrC Consultation on Partnerships


We made the following general comments:


• The review of the tax treatment of partnership taxation as set out in the consultation document seems rather at odds with the UK’s ambitions to establish itself as the global centre for the investment management industry (where


LLPs are a common structure). In particular, it is not credible to be advertising the UK as being “open for business” to investment managers, whilst at the same time amending the tax rules such that businesses (and their advisors) are in a position where the business structure that has been used for such businesses for the last decade may well no longer be workable.


• We also note that the Government asked the Office of Tax Simplification to review the tax treatment of partnership arrangements more fundamentally on 20 March 2013. It would appear to be more sensible to wrap the present consultation into


that review, rather than changing the rules once in Finance Bill 2014 and then potentially changing them again shortly thereafter.


• Although we acknowledge that some abusive planning has been undertaken in the areas with which the consultation is concerned, large numbers of businesses, both in the investment management arena (which it is government policy to promote) and also to some extent in professional services firms, have adopted structures where profits are “parked” with a corporate member for working capital or remuneration deferral purposes. Whilst it is obviously open to the government to change policy and tax these arrangements differently, we do not consider them to be abusive under current law and so it would be wholly wrong not to permit businesses proper opportunity to adjust their affairs to deal with a new tax regime.


• The legislative changes being proposed are both complex and detailed. There remain a number of key policy points which the document acknowledges are undecided. Given the nature of the changes, we do not consider that it is fair to expect businesses to incur the very substantial costs associated with responding to them until they have been finalised. Our very strong view is therefore that if the legislative changes are to be included in Finance Bill 2014, they should take effect from April 2015.


• In relation to the “Disguised Employment” section of the consultation, we suggested that there should be a single test. We would prefer a test based on the first condition, which would tax an LLP member as an employee if, as a matter of employment law, they are an employee. We do not believe that it is necessary or desirable to establish a new test for the employment status for LLP members specifically.


• In relation to the “Profit & Loss Allocation Schemes” section of the consultation document, we said that whilst we note that there are a number of abusive schemes in the market, which the Government understandably wishes to stop,


(Cont. on page 4) City Solicitor • Issue 83 • 3


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