28 finance Tax changes for LLPs
On December 10, 2013, the draft 2014 Finance Bill was published and included the proposed legislation relating to 'salaried members' of LLPs, writes Naomi Nesbit, partner, Winchester and Romsey, Wilkins Kennedy LLP
The perceived tax avoidance from disguised employment within Limited Liability Partnerships (LLPs) has been a topic of much interest since HMRC released its consultation document, Partnerships: A review of two aspects of the tax rules, on May 20, 2013.
Currently, there is a presumption that all individuals who are members of an LLP are treated as self-employed for tax purposes, even if the terms of their engagement more closely resembles those of an employee. The effect of this is that a partner can receive more favourable treatment in terms of income tax and NICs than if they were considered an employee engaged under similar terms.
The new draft legislation has the objective of removing the afore-mentioned presumption. It does so by setting out three conditions and where all of these
conditions are satisfied, the relevant individual will be treated for tax purposes as an employee of the LLP rather than as a member of the LLP.
Condition A - The member is to perform services for the LLP in his or her capacity as a member, and is expected to be wholly or substantially wholly rewarded through a “disguised salary” that is fixed or, if varied, varied without reference to the profits or losses of the LLP;
Condition B - The member does not have significant influence over the affairs of the partnership; and
Condition C - The member’s contribution to the LLP is less than 25% of the disguised salary.
For more information on how these changes could affect your business, contact your local Wilkins Kennedy office.
New buyout solutions ease exit for retiring business owners
Private acquisition firm SG Berkshire has launched new buyout solutions – MIBOs and MEIBOs – enabling retiring business owners to exit their companies at the right value while protecting their lifetime’s work.
The ethical structures of the Management Involved Buyout (MIBO) and Management Employee Involved Buyout (MEIBO) facilitate London-based SG Berkshire in purchasing an entire company while making a significant share of its equity available to the existing management team (MIBO) and employees (MEIBO).
This allows the business owner to leave straightaway, while maintaining business momentum, preserving job security and ensuring company legacy continues.
“Although SG Berkshire has a controlling stake in the company the existing management team continue with the day- to-day running of the business, as they have the expertise in their field, which aids a smooth transition,” explained Stephen Greenwood, chairman of SG Berkshire.
www.businessmag.co.uk
“SG Berkshire will often take a non- executive board role and offer its own commercial knowledge and expertise to maintain the long-term company future, but always ensuring the lifetime’s work of the business owner is preserved.”
Past research for the DTI’s Small Business Service has indicated that up to 100,000 UK businesses might be closing each year due to ‘transfer failure’ where a business owner cannot find a suitable buyer. Others are forced to delay retirement, wind-down their business or undertake a less acceptable trade sale.
With traditional MBOs significantly down 90% since the financial crisis, the SG Berkshire solutions provide interesting alternatives. Unlike many PE and VC investments, SG Berkshire’s business involvements are focused on long- term commitment “with a view that the business exists for ever”.
Greenwood states: “Our target market is SME business owners aged 55 to 75 looking to retire from commercial life, who also want to ensure the legacy of
Details: Naomi Nesbit 01962-852263
naomi.nesbit@
wilkinskennedy.com www.wilkinskennedy.com
their business. Ideally, the business should produce a consistent profit of at least £100,000 per annum and have a solid, motivated management team who want to work in partnership with our buying team.”
Adrian Jobsz, sales director of Air Parts, a recent SG Berkshire acquisition, commented: “Through SG Berkshire, the senior management was able to step-up and take the reins as well as enabling the company to take advantage of external management support and direction. As a result, the management team has been invigorated by the opportunity to own part of the business and have control in the shaping of its future.”
SG Berkshire’s entrepreneurial and financial expertise enables it to create low risk capital structures to acquire businesses. Successful deals have already been achieved in the electronics and aerospace sectors and others are in the pipeline.
Ged Tilley, CEO of SG Berkshire, adds: “With the post-war ‘baby boom’ generation now of retirement age, many owners are looking for a low risk, cost- effective means of exit. Our strength is our ability to deliver a high quality, flexible package that offers an immediate deal for the retiring vendor.”
THE BUSINESS MAGAZINE – THAMES VALLEY –APRIL 2014
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52