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In 2002, a sole trader transferred his business to a limited liability partnership with a corporate partner. The company’s profit share pays for a small salary to the trader and generates entitlement to state second pension
Our client operated his business as a sole trader until 2002. For various non-tax reasons he then moved the business into a newly formed LLP. The other partner is a limited company formed at the same time. The limited company is controlled by our client and has a small trade of its own.
Each year a share of the profits of the LLP is allocated to the company. Out of the company profits a salary is paid to our client. As a result of this arrangement our client has established 12 years of entitlement to state second pension.
Our client is minded to continue in this vein after 5 April 2014. If he does so and if HMRC is successful in enforcing the type of adjustment foreseen in Finance Bill 2014 will my client suffer double taxation?
Query 18 363 – Leapy Lee
Reply from Cello Boy
Leapy...
