Firms brace for change as Hammond announces proposal on profit sharing rules
Chancellor Philip Hammond announced yesterday that the government is preparing to enact legislation that would affect taxation on profit sharing among law firms. During the Autumn Statement on 23 November, Hammond said the government will likely mandate that partnerships solidify profit-sharing arrangements at the start of each tax year, as opposed to the end of the year.
Critics of the proposal argue that the move would reduce law firms’ ability to tie profit sharing to performance. According to Roy Maugham, a tax partner at UHY Hacker Young, many businesses in the UK are structured as partnerships so that they can provide compensation based on performance.
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