1 Jul 2014
Sara White, Editor, Accountancy
A group of accounting firms and limited liability partnerships (LLPs) have set up a multi-disciplinary partnership body, the Professional Practices Alliance (PPA), to provide professional services firms with specialist advice on LLP status and restructuring advice
Members of the alliance include chartered accountants, Buzzacott LLP, and law firms Maurice Turnor Gardner LLP, CM Murray LLP and Hierons LLP.
PPA member, Clare Murray of CM Murray LLP, said the group was set up to break down professional silos and provide advice to professional services firms, particularly on structuring practices, tax and accounting issues and partnership law.
‘Professional services firms often feel that their specialist advisers are working in silos, without a full awareness of the wider tax, accounting, legal or financing implications of the advice being given to the firm,’ she said.
‘The Professional Practices Alliance provides professional services firms with access to joined up, collaborative advice on partnership law, tax, accounting, structuring, financing and regulation, from specialists who are each market leaders in their own field.’
At its recent launch event, the Alliance debated whether the LLP structure is fit for purpose or whether it has ceased to be attractive to professional services firms.
This follows the direct challenges to LLPs recently with the change in the tax treatment of salaried members, and by the Supreme Court ruling last month (Winkelhof decision) that LLP members are workers for certain statutory employment rights. Such rulings have created uncertainty around the LLP structure.
Richard Turnor of PPA member, Maurice Turnor Gardner, who chaired the lively debate said: ‘LLPs still offer the best of all worlds. Members benefit from limited liability and can have a role in management. LLPs can also adopt sophisticated corporate governance arrangements like global corporates.’
In assessing the alternatives to LLP structure, the Alliance expressed the view that although limited companies now appear to offer greater certainty, they may not suit a firm that operates, however inefficiently, as a democracy. Succession challenges should not be underestimated.
Richard Hierons, partner at Hierons LLP, and a founding member of the group, added: ‘Corporate and partnership structures have advantages and disadvantages; LLPs will remain attractive.
‘Boutique firms may offer a “partnership” model but most larger professional firms need a “management” model. The transition from partnership to corporate management will continue for some years. It will be challenging for many firms and may be more important to future success than choosing the right vehicle.’
With major changes to the tax status of partners at LLPs now in play, Cliff Cooper of Alliance member, Buzzacott LLP warned: ‘We feel the flexibility of LLPs can’t easily be matched by other structures or incorporation, particularly for larger firms, but it would be helpful if legislature could provide a bit more stability for LLP structures, particularly when it comes to tax rates.
The group is planning a number of events this summer, including a breakfast roundtable on managing risk and liability in professional practices on Tuesday 29 July 08:00 to 10:00 at The Hub, Howden Windsor, 16 Eastcheap, London EC3M 1BD.
The Alliance website can be found at www.professionalpracticesalliance.com and on twitter at @partnershipalln