HC Deb 05 June 2000 vol 351 cc77-8W
Mr. Mitchell

To ask the Chancellor of the Exchequer what consultations he has had with the DTI about the tax consequences of plcs changing status to limited liability partnerships under the new limited liability partnership proposals; and what is his estimate of the effect on the public revenue. [124429]

Dawn Primarolo

As my hon. Fiend is aware, under the proposals in the LLP Bill, the new Limited Liability Partnerships will be taxed as partnerships rather than as companies. I can confirm that the officials at the DTI have been in close contact with Inland Revenue officials who have been reviewing the draft legislation.

I would also refer my hon. Friend to what was said both in this House, by my hon. Friend the Minister for Competition and Consumer Affairs on Second Reading, 23 May 2000, Official Report, column 891, and in the other place by my noble Friend Lord McIntosh of Haringey on Report, 6 March 2000, Official Report, House of Lords, column 870. They both said that, because of the possibility that some LLPs might be set up solely because of their tax status as partnerships, officials at the DTI and the Inland Revenue will jointly be looking into the taxation of LLPs. Part of this work is likely to touch on the subject area of this question. And because this work is ongoing I am not in a position to give a more detailed answer at the moment.

Mr. Mitchell

To ask the Chancellor of the Exchequer what proposals he has for bringing the tax regime of the proposed new limited liability partnerships into line with that applying to public limited companies; and what estimate he has made of the scale of losses to the Exchequer of public limited companies to register as limited liability partnerships. [124367]

Dawn Primarolo

On Report in the other place my noble Friend Lord McIntosh of Haringey recognised—6 March 2000,Official Report, House of Lords, column 870—the possibility that taxing LLPs as partnerships might make them attractive as a vehicle for a wider range of activities than they were intended for. Because of this, my noble Friend Lord McIntosh announced that work would be carried out jointly by the DTI and the Inland Revenue to look into these issues. Depending on what this work finds we will consider bringing forward further tax legislation in due course.

On second reading of the LLP Bill in this House my hon. Friend the Minister for Competition and Consumer Affairs referred again to this work—23 May 2000, Official Report, column 891.

Because this work is ongoing I am not currently able to give more detailed information.