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  • Tax

    LLP Mixed Partnerships

    On the face of it using a LLP Mixed Partnership seems to ‘solve’ the s24 problem faced by higher rate tax payers. I have read all the posts on the subject on Property Tribes and note there is a lot of negativity towards this particular solution.

    Falling foul of Section 850C ITTOIA 2015 is the main reason for this negativity. There is an obvious risk that HMRC could use this to reclaim tax with all the huge financial consequences that could ensue for anyone that goes down the LLP Mixed Partnership route.

    Many landlords will not want to take this risk. My question is why not? There is more than enough Public Liability insurance in place should HMRC deem the scheme to be tax evasion. The only risk I can see is that you may be involved in the scheme for years before HMRC investigate you and once the dust settles, if you are deemed to have evaded tax, you will have lost that time to have made other arrangements.

    That seems a risk worth taking to me.
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    The Public Liability insurance covers only the fees you paid the accountant who sets this up.  It does not cover the avoided tax that HMRC will want you to pay if they decide you should pay it.  Hence, you could find yourself with years worth of tax to pay in one go.

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    The insurance covers everything. You will be put back to how you were before you embarked on the scheme. This includes refunding all fees, fines, extra tax etc. The only thing you will have lost is the time you’ve been in the scheme which you could have used for an alternative strategy.
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    I looked at every avenue of S24 and how I could best get round the issue

    I met a number of Accountants and all had a different view on this topic

    The road I took was to sell my own property to my company and  pay the costs and tax 

    I was lucky I did not pay CGT because the properties  had not  made huge gains since i purchased them

    My other reason was because wanted to sleep at night

    Yes you have insurance ect But this could be challenged at some point and it may be years down the road when the Accountant who arranged this strategy could well be dead or no longer trading

    My own personal accountant passed away only Two months ago and he was 62 so it can happen 

    My Tax adviser is also a Landlord and a person I knew long before used him as my tax adviser

    and he said to me I AM EFFECTED BY S24 IF IT WAS EASY TO AVOID I WOULD BE DOING IT MYSELF 

    i have always remembered his words and thats why I dont use any other strategy than the one i have used

    I think this all comes down to what is safest  and if  you can sleep at night and if things do go wrong who is there to support you

    no insurance covers worry and stress when you wake in the middle of the night with an HMRC investigation and if you do get it wrong what tax will you pay and what penalties





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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    I don’t think that’s how the insurance would work. The insurance is provided by a third party not the accountant. The accountants used are a practice not one accountant so they’d all have to die which isn’t going to happen. The insurance would need to be checked to confirm what the situation would be if the accountant ceased trading. I’d be very surprised if the insurance cover was not still in place and you’d be able to get another firm to put you back to where you were before you started the scheme if needed.

    Let’s remember one thing. Nearly all accountants are risk averse. They play it totally safe. They won’t recommend a scheme if there is the slightest risk that it will leave them open to a claim from the landlord. No surprise all the advice you received told you not to go down this path. Accountants act on your instructions. It’s up to you to know what the best way forward is and then instruct your accountant to get on with it.
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    as far as im aware the insurance only covers negligence which has to be proved.  being wrong with hindsight is far different from negligence.

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    and we all know Insurance co dont like paying out its in there DNA

    I  am covered for loss of rent  due to a flood last September and I am still waiting to be paid

    its very strightforward but the buggers still wont pay

    God help anyone who makes a claim on this sort of thing


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Of course they don’t like paying out. If they did then all our insurance premiums would be through the roof. It’s like any busines. There are good and bad companies. When taking out insurance it’s very important to use a company with a good track record and maybe pay a bit more for the privilege. 


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    But how do you know the insurance is good if your not picking the company

    and even if when you pick it yourself ? you again dont know how good they are until you claim

    Insurance Co love loopholes after all

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    No. It covers everything and gets you back to where you were before you embarked on the scheme.
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    is that a special policy?  its not wot Tony says below!

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