MFA Comment Letter on UK Tax Consultation Document

On August 9, MFA submitted comments to Her Majesty’s Revenue & Customs in response to HMRC’s consultation document on certain tax aspects of partnerships.  In the letter, MFA encouraged HMRC to: (1) adopt a single test to determine when a member of an LLP would be deemed a “salaried member,” specifically the test proposed by HMRC that focused on the economic rights relevant to a determination of an individual’s membership status; (2) eliminate the additional proposed test that would create an ambiguous and uncertain test for determining when an individual is a “salaried member;” (3) provide additional guidance on how HMRC plans to interpret and implement the test and how HMRC plans to implement associated anti-avoidance rules; (4) clarify that rules related to allocation of profits and losses will not prevent partnerships from engaging in arrangements that have a legitimate business rationale; and (5) apply its rules in a manner that avoids double taxation and that permits taxpayers to reclaim taxes paid on amounts that are never received.