“Senior lawyers, accountants, architects, and their employers may soon face closer scrutiny from HM Revenue and Customs (HMRC) as the agency steps up its fight against tax avoidance. HMRC has recently changed how it interprets tax laws, raising concerns among tax advisers. The main issue is whether senior partners in limited liability partnerships (LLPs) should be treated as employees or self-employed for tax purposes. If firms are unprepared for this change, they could face large tax bills, with each partner potentially owing thousands of pounds. This is part of a larger effort to tackle “disguised employment” and close tax loopholes. The Labour party has promised to raise £4.7 billion by cracking down on tax errors and evasion, and HMRC is already targeting various sectors with strict rules like IR35. For firms, getting this wrong could lead to substantial back payments of National Insurance.”
Quotation by Nigel Holland.
- HMRC targets senior partners in LLPs, focusing on tax classification.
- Misclassification risks huge tax bills for firms and partners.
- Labour aims to raise £4.7 billion by fighting tax avoidance.
- Partners often classified as self-employed, saving on National Insurance.
- HMRC’s crackdown is part of efforts against “disguised employment.”
