Beware Tax Planning Models Using LLP’s

by Mark Alexander

7:03 AM, 11th August 2017
About 3 years ago

Beware Tax Planning Models Using LLP’s

Make Text Bigger
Beware Tax Planning Models Using LLP’s

If you are being advised to use an LLP as a stepping stone towards incorporation then you have good cause to be wary.

Of course there are many perfectly legitimate reasons to form a Limited Liability Partnership but that’s another story for another day.

However, there is a business model doing the rounds which relies on a piece of legislation created to deal with CGT on the liquidation of an LLP. This legislation is being abused by some tax planning schemes, and in my opinion it will not be long before HMRC comes down on it like a ton of bricks under their General Anti Abuse Rules in GAAR legislation.

When property is transferred into an LLP the transfers can be structured so that there is no SDLT or CGT payable. That is a fact and the people touting this abusive tax avoidance scheme know that and present Counsels opinion from top Barristers.

It is also a fact that if the partnership genuinely fails and is liquidated then the base costs for calculating CGT is the value of the properties at the point they were transferred into the LLP. Again, Counsels opinion of the legislation produced by advisers touting abusive tax avoidance schemes which are reliant on this piece of legislation will also confirm that fact.

At face value this is all great news because at the time the properties are transferred to the LLP they may well be worth considerably more than they cost to acquire. CGT avoided you may well happily think.

Errrm, sorry but NO!

If you enter into a LLP with the intention of liquidating it at a later date to avoid tax, that is without doubt abuse of the tax system and HMRC are going to be far from happy about it. My concern is that 1,000’s of LLP’s are currently being formed for exactly that purpose.

It doesn’t take a rocket scientist to see how HMRC will see straight though this.

If you form an LLP today, liquidate it after say one year and then a company, which has exactly the same owners miraculously decides to acquire the same assets it is pretty obvious what has occurred.

If this structure has been pitched to you, please consider very carefully what I have said above. You could find an unwelcome tax demand on your doormat for all the CGT you have avoided at some point in the weeks, months or even years after you have liquidated if you take up this scheme.

If you doubt what I am saying, ask your accountant to send all the papers to HMRC as attachments to an application for non-statutory clearance and see for yourself what reply you get and how quickly the scheme metamorphosis in some way. This is a scheme being touted by mainly by chancers, but shockingly, some very big accounting names have fallen for it and are recommending it to their clients too.

Show Form To Book A Tax Planning Consultation

Form To Book A Tax Planning Consultation

Consultations include new client compliance checks, fact find via email with complimentary software, expert analysis, a detailed written report and recommendations and a recorded video conference with your Property118 Consultant and our Hon. Legal Counsel, which your existing advisers are welcome to participate in. All consultations are confidential and you will be provided with a copy of the recording of the video conference. We GUARANTEE total satisfaction or a full refund.
  • Please provide an overview of your circumstances and what you are looking to achieve.



Eviction ban to end 24th August

Landlord incorporation and tax planning presentation

Landlord incorporation and tax planning presentation

The optimal ownership structure for UK landlords

The optimal ownership structure for UK landlords

Landlord Incorporation Specialists

Landlord Incorporation Specialists

Incorporation relief and latent gains explained

Incorporation relief and latent gains explained

Incorporating your property portfolio without having to refinance

Incorporating your property portfolio without having to refinance

Landlord Incorporation Strategies – Update for 2020

Landlord Incorporation Strategies – Update for 2020

Capital Account Restructure – Case Study

Capital Account Restructure – Case Study

What Does “Washing Out CGT On Incorporation” Actually Mean?

What Does “Washing Out CGT On Incorporation” Actually Mean?

Stamp Duty when transferring the ‘whole business’ of a Partnership into a Limited Company

Stamp Duty when transferring the ‘whole business’ of a Partnership into a Limited Company

Software to analyse the viability of transferring a property rental business into a Limited Company

Software to analyse the viability of transferring a property rental business into a Limited Company

Inheritance tax and legacy planning for property company owners

Inheritance tax and legacy planning for property company owners

HMRC Internal Manuals ‘Landlord Incorporation’

HMRC Internal Manuals ‘Landlord Incorporation’

On-demand webinar explaining the uses of Limited Liability Partnerships “LLP’s” for landlord tax planning

On-demand webinar explaining the uses of Limited Liability Partnerships “LLP’s” for landlord tax planning

Guide for landlords on forming an LLP for property investment

Guide for landlords on forming an LLP for property investment

LLP structure reduces landlords tax bill by 85% – CASE STUDY

LLP structure reduces landlords tax bill by 85% – CASE STUDY

Partnership taxation and associated rules

Partnership taxation and associated rules

Business continuity and succession planning for landlords

Business continuity and succession planning for landlords

Property valuations for tax planning purposes cost just £19.95 each

Property valuations for tax planning purposes cost just £19.95 each

Hybrid Tax Structure – Landlords BEWARE!

Hybrid Tax Structure – Landlords BEWARE!

Tax Planning Bodge Jobs – Limited Liability Partnerships “LLP’s”

Tax Planning Bodge Jobs – Limited Liability Partnerships “LLP’s”

Landlords Tax Planning Bodge Jobs – inter company lending

Landlords Tax Planning Bodge Jobs – inter company lending

Book A Consultation

Book A Consultation

A Landlord’s Tax Planning Disaster

A Landlord’s Tax Planning Disaster

Just say NO to tax avoidance “schemes”

Just say NO to tax avoidance “schemes”

Using a property investment LLP for school fees planning purposes

Using a property investment LLP for school fees planning purposes

LBTT for sole owner landlord incorporation in Scotland

LBTT for sole owner landlord incorporation in Scotland

Stamp Duty relief on properties split into multiple dwellings

Stamp Duty relief on properties split into multiple dwellings

Expat Landlords Tax Planning Opportunity

Expat Landlords Tax Planning Opportunity

Open A Business Bank Account In Minutes

Open A Business Bank Account In Minutes

Why we don’t apply a ‘one-size-fits-all’ approach to landlord tax planning

Why we don’t apply a ‘one-size-fits-all’ approach to landlord tax planning

Four Property Investment Structures – Video Interview

Four Property Investment Structures – Video Interview

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More