The proposed  changes have come about as the Government seeks to remove the presumption of self-employment  for LLP members  - with LLP members in future having to prove they are self-employed in the usual way.
Tax expert David Teale of DTE Business Partners has warned law firms that the changes will have far-reaching implications for those already in LLP structures as well as firms considering going down this route.

Preferred structure for law firms

He added: “LLPs are a business structure favoured by many professionals, particularly lawyers in recent years having a number of commercial advantages over an ordinary partnerships-unlike an ordinary partnership they are a separate legal entity from the individuals making up the partnership, and the partner’s individual liability for the debts of the partnership is limited.”
Mr Teale went on to say that the current arrangement "means that members receive the tax advantages of being an LLP member when  in actual fact the role of many of these members is much closer to being that of an employee who would usually pay tax and National Insurance Contributions under Pay As You Earn (PAYE)"

Proving self-employment

If the changes are implemented, partners  will be required to prove self-employment  by the application of key employment tests rather than by presumption of being a member of an LLP. Mr Teale called for those looking to set up LLPs to take note of these possible changes "sooner rather than later", and for current LLPs "to review their arrangements accordingly."