FROM HANSARD, HOUSE OF COMMONS DEBATES, 5 June 2000, col. 77

                         Limited Liability Partnerships

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. Friend 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 in both this House by my hon. Friend the
Minister for Competition and Consumer Affairs at Second Reading, 23 May 2000, Official
Report, column 891, and in the other place by my noble Friend Lord McIntosh of Haringey at
Report Stage, 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: At Report Stage 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

5 Jun 2000 : Column: 78W

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.

At 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.