Spotlight 63 – HMRC and Property118 Agree

Spotlight 63 – HMRC and Property118 Agree

11:26 AM, 11th October 2023, About 7 months ago 3

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Following the social media frenzy regarding HMRC’s Spotlight 63 on “Hybrid LLP” abuse we have been asked numerous times by our clients how they might be affected by planning we have recommended to them.

The answer is simple, they are not.

There are times when landlords opt to place their property rental business into an LLP. This structure does not mitigate section 24 and personal taxation liability is accounted for on the personal tax returns of the recipients of the allocated profit. The reasons for forming this type of LLP could be for business continuity/succession planning or to ring fence business liabilities/activities away from personal wealth.

HMRC spotlight 63 article relates to “Hybrid LLP’s” where one of the members is a corporate entity and assumes liability for mortgage payments of the other members in order to (attempt to) achieve tax relief.

Property118 have never endorsed (and never would) the misuse of a “Hybrid LLP”.

We do very occasionally come across scenarios where a mixed LLP is an appropriate recommendation, but NEVER for the tax-abusive reasons highlighted within HMRC’s Spotlight 63.

Our articles earlier this year couldn’t have been any stronger in explaining the aspects of Hybrid LLP that are ineffective. In fact, HMRC’s Spotlight 63 uses our words almost verbatim!

Please see the articles and their published dates via the links below;

www.property118.com/how-property118-are-helping-a-landlord-to-resolve-a-serious-hybrid-llp-tax-planning-blunder/

and later …

https://www.property118.com/hybrid-llp-structures-game-over/

We first expressed our concerns back in 2018

https://www.property118.com/tax/hybrid-tax-structure-landlords-beware/

Our support for landlords has always been based on tangible experiences, not mere speculation or online bravado; these issues impact real people’s lives, including many others beyond our immediate purview. We were instrumental in highlighting the problems with Hybrid LLPs to HMRC and we are delighted to see this work being recognised in Spotlight 63, a process that has taken much longer than we had hoped for.

We urge everyone to read the Spotlight 63 on HMRC’s website rather than the media circus that has been created around landlord tax planning in search of clicks and followers.

To be clear – HMRC and Property118 remain in complete agreement with the treatment here.


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Comments

Mark Alexander - Founder of Property118

11:33 AM, 11th October 2023, About 7 months ago

It is disappointing that 'Witch Hunts' currently occurring in this sector are leveraged and conflated by rivals to imply that Property118 and Spotlight 63 are connected in any way, other than the fact that we have been warning landlords to beware of tax-abusive use of the Hybrid LLP structure since 2018.

My heartfelt sympathy goes to all those landlords who ignored or missed our warnings and fell for the "Hybrid LLP" sales pitch.

JB

19:42 PM, 11th October 2023, About 7 months ago

I feel very sorry for landlords who are involved with the Hybrid Scheme. Thankfully it was not something that appealed to me.

I am wondering if property118 has complied with the Disclosure of Tax Avoidance Schemes (DOTAS) legislation

Mark Alexander - Founder of Property118

14:54 PM, 12th October 2023, About 7 months ago

Reply to the comment left by JB at 11/10/2023 - 19:42
The guidance we provide does not engage DOTAS

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