In the Autumn Statement a further tightening of the rules relating to mixed partnerships was announced.
Mixed partnerships are where an individual and an non individual (or combinations thereof) are partners in a partnership or LLP.
The tightening of the rules relates to situations where the non individuals share of profits are excessive, and the individual can access them.
For example, a common tax planning strategy in recent years is now outlawed:
A partnership of two people, A&B is doing well and generating more profits than needed for immediate personal requirements. A&B incorporate A&B Limited with themselves, maybe their spouses as well, as shareholders, and add that to the partnership to form a three way partnership, A, B and ABL. Profits up to drawings requirements are allocated to A and B, and taxed at personal rates, with the excess going to ABL and rolled up at lower Corporation Tax rates.
The new rules now seem to require ABLs profit share to be allocated to A&B.
The solution, of course, is to incorporate the business in full in this instance, but in some more complex cases thats not desirable. Over time we will see how wide this new anti avoidance goes and will it outlaw the practical and eminently sensible options of holding investment properties in LLPs or running joint ventures in such a way.