How many clients have a ‘cunning plan’ where they overdraw their private company loan account and then ‘rectify’ the position with a bonus/dividend just before 9 months have passed so as to avoid a charge for loans to participators under S455 CTA 2010? How many then repeat the pattern year on year?
How many partnerships have converted to LLPs, have ‘salaried partners’, saving employer/Class 1 NIC?
How many structures have corporate partners included?
Each of these types of arrangements may be affected by proposals in the Finance Bill 2013 and the outcome of a current Government consultancy process (scheduled to close 9 August 2013) where new legislation is proposed for April 2014. As the proposals affect the fundamentals of business planning, then serious strategic thought should be given on the potential impact straight away.
The rules are quite complex (and therefore at odds with supposed ‘tax simplification’) and may well result in an unexpected hit where businesses will find well established arrangements are suddenly taxed differently.
In particular, new provisions on the S455 charge are being brought in, which seek to deny the relief due on a ‘repayment’ of a loan where there are arrangements in place to advance a replacement loan.
Changes are also planned for partnerships where a salaried partner carries little or no equity risk whereby in future they are likely to be liable under PAYE with consequent impact on cash flow, expense deductibility, car arrangements and employers national insurance contributions.
