One of the issues I discussed in the question and answer session after the debate I took part in last night at the Tax Coop meeting was the abuse of limited liability companies, most especially in the U.K., but which we permit to be exported to other countries using companies incorporated here. It's a big problem, which makes this morning's video especially relevant. Why do we put up with limited liability, and how should we manage its consequences?
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Two fictions bedevil our society – that of the Trust and that of the inanimate legal entity with limied liability. Both of these fictional vehicles allow a person with capital to legally separate themselves from the social constructs that society allows them to create whilst continuing to enjoy the product of the capital. At the time of their creation I am sure that that in the case of trusts they facilitated the long absences of knights going off to the crusades and in the case of limited liability that they enabled the risks associated with, say, the Atlantic Slave Trade to be spread.
We now have a “sacred duty” to pay off our debt says Sunak whislt overseeing a system which sees serial liquidators leaving creditors and the public purse unpaid after transferring benefit to overseas trusts.
I wonder if he realises yet that we could be looking at a tsunami of liquidations with suppliers being reluctant to continue to trade with limited liability companies, now perhaps loaded with “bounce back” loans.
Limited liability might not be as widespread as we think. For the multitude of smaller businesses that are limited liability companies requiring bank services and an overdraft will the bank not have personal guarantees, bonds and floating charges over directors personal assets? Is there not perhaps more scope in the use of multiple companies, dormant companies and offshore companies to dodge liabilities?
Maybe…
We need Companies House to be fit for purpose and properly identify shareholders and directors, banks to ‘know their customer’ and HMRC to properly train their investigation teams. Too many weak links.
Agreed, wholeheartedly
Something Scotland must not replicate when independent
Companies House filings are a joke. CH oversight has been watered down so much that it might as well not exist!
Agreed
Do you feel the same about LLPs? The structure is clearly open to abuse..
Of course I do
I am well aware I ask for change that may impact me
Yep you’ve taken full advantage of the structure so far.. Effectively enjoying a single person LLP..(the other member of which is a sick woman with no expertise in the LLP’s business and who appears to have no professional contact with the main LLP member following a divorce)..Some might even call this a scam arrangements to allow limited liability to the main LLP member.
We’re married
We’ve spoken six times today, mostly on LLp business where I sought her opinion
And if you doubt her interest in political economy she tweets in the issue many times most days and frequently engages ministers – more often than I do
Shall we take that as starters for how wrong you are?
I suggest you stop trolling
If she’s so involved, why in all the years TRUK has been around has she never authored a single blog post on here?
Or if she has done so much, why she only receives 1% of the revenues, which looks like you are paying her basically nothing from the LLP to minimise tax she would pay on top of her GP salary. Or just that actually she has no involvement in TRUK.
Or is it the case that the charitable donations which have funded TRUK have been passed through to yourself as non-taxable income – avoiding income tax.
All in all, a lot of questions to answer and it’s wonder why you aren’t more transparent on it, when you keep pushing for more transparency for every other company?
a) Because she inputs, but does not write here
b) Because that’s what we agreed
c) She’s retired on the grounds of ill health from the NHS: she has not got a GP salary. It would save tax to pay her more. Her affairs are independent of mine. We have maintained our agreement through very varying circumstances. If it’s ever appropriate we will change it. It won’t be subject to a public vote.
d) As has always been made clear, every penny received is always subject to tax
Completely transparent
Richard,
Firstly can I say to your detractors, play the argument not the person.
I am happy to support propositions put forward by those who I otherwise disagree with, sometimes with a certain amount of reservation if necessary. Certainly I am sure that many who would otherwise regard Boris Johnson as beyond the pale supported his call for an immigration amnesty.
Secondly having tried to make some sense of your domestic arrangements from your postings, I am sorry to hear that your wife is unwell.
Let me provide a provide summary answer to this.
In 2013 my wife was diagnosed with cancer. I am pleased to say she is now in remission.
However, when being treated she had chemotherapy, as well as surgery and radiotherapy. One of the advised side effects of chemo, with maybe a 1 in 10,000 risk, was serious mental ill health. She was the 1 in 10,000, and an extreme case at that. She had never suffered mental ill health before then.
For five years she could do very little, including parenting, which fell to me. Her condition was so bad that we lived apart from 2015. We still do. But I maintained my commitment to care for her, and have. We remain married. The arrangement may be unusual. We have not changed it, for many reasons. That’s our business.
During the period from 2013 to 2018 I admit that her contribution to Tax Research was limited, but not non existent. But she’d lost her health and job, having had to retire as a GP. I was not going to take away something else she had also contributed a great deal to.
Now she has recovered somewhat, I am pleased to say. She has been actively engaged in political economic thinking again for the last couple of years and regularly discusses my work, and that of Tax Research LLP with me, as well as this blog. She tweets, often, in her own right of course.
There has never been a tax advantage in our arrangement. Right now it is definitely not to our advantage. So what?, we say.
And is she qualified? In political economy, by life. But she also has, if I recall correctly, seven postgraduate qualifications in medicine including MRCP and MRCGP.
It’s been bloody tough on her, me and our children. If I get defensive on this issue, now you know why.
Richard,
PLease pass my best wishes on to your wife and I hope that she recovers
Right now things are better than for a long time
Richard,
my sympathies to you and your wife in your travails.
I thank you for the work you do in this blog, I have been greatly enlightened by your excellent articles.
I am horrified that you are burdened by trolls such as evidenced here. I hope that by the candour of your (unecessary) clarifications they feel suitably belittled and will rethink their vicious and uncharitable opinions. Maybe they could have a review of some of John Lennon’s kindlier compositions?
Regards,
tony murray
Thanks