CIOT has welcomed the announcement that the government has decided that there is not currently a strong case for action to prohibit corporate members of LLPs and calls for a more targeted approach to the issue if a minority of companies abuse their use.
The tax body criticised initial government plans to ban corporate members of limited liability partnerships (LLPs) outlined in a consultation issued by the Department for Business, Innovation and Skills (BIS) consultation on the scope of exceptions to the prohibition of corporate directors in LLPs.
In its response to the consultation, CIOT says it does not agree that the government should review the issues in relation to corporate members of LLPs in parallel with the review of the Small Business Enterprise and Employment Bill provisions covering corporate directors of companies, or sooner if compelling evidence of abuse of the LLP structure were to emerge, given that these are separate issues and should be considered on their respective merits.
It goes on to suggest that it would be preferable to give an indication that future policy would not withdraw general use of LLPs by companies, but would consider a targeted approach should misuse by a minority become material.
The consultation, which ran from 27 November 2014 to 8 January 2015 sought views on circumstances where the use of corporate directors of UK companies should be allowed.