Insertion of corporate partners, usually as members of a Limited Liability Partnerships (LLPs), has become a popular structure. This is partly in response to the additional rate of income tax payable by individuals, but also due to the flexibility for remuneration strategies provided by the company. Provided that cash is not required by the individual members, profit share can be allocated to the corporate partner and set aside until such time as it can be extracted hopefully at lower rates in future.
Finance Act 2014 introduced anti-avoidance legislation to counter planning involving mixed partnerships, ie where a partnership is made up of a mixture of individuals and non-individuals (eg a company). The rules became effective from 6 April 2014 (with anti-forestalling provisions applicable from 25 October 2013) and require excessive profits allocated to a company to be reallocated to the other individual partners. Excessive losses allocated to an individual partner are also subject to the rules. ITTOIA 2005, s 850C; ITA 2007, s 116A