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Q&A: Why does HMRC treat a Jersey limited liability partnership differently from a US one?

05 February 2024 / Andrew Parkes
Issue: 4923 / Categories: Comment & Analysis
Andrew Parkes on why HMRC treats a Jersey limited liability partnership differently from a US one

HMRC answers that question in its International Manual and the relevant guidance was greatly expanded just before Christmas including throwing down a gauntlet to US limited liability companies.

What has changed?

HMRC now goes into more detail as to what the guidance is considering when it talks about entity classification and also importantly what it is not. The guidance confirms that the classification is about whether the owner/member is taxed upon the income or gains of the entity (transparent) or whether they are taxed on distributions from the entity (opaque). The guidance is not about whether the entity is a partnership company trust etc.

The guidance still lists the six criteria from Memec plc v CIR (70 TC 77) that need to be considered but now provides an example as to why all of the conditions need to be considered and it is not...

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