SNP reiterates calls for action on Scottish limited partnerships in manifesto

The Scottish National Party (SNP) has made the abolition of Scottish limited partnerships a key plank of its armoury against tax evasion in its 2017 election manifesto

Among the SNP’s headline pledges is to release £118bn of investment in public services by 2021-22, partly through ‘balancing the budget’, and partly through reintroducing the 50p additional rate of income tax.

‘Until such time as the Scottish Parliament controls the rules on income tax avoidance, there is a risk that an increase in the Additional Rate of income tax in Scotland alone would lead to a loss of revenue. However, we support an increase in the Additional Rate from 45p to 50p across the UK as a whole from 2018/19,’ the manifesto states.

The party also promises to oppose any rises to VAT and national insurance, and offers support for the reversal of the married couple’s allowance, the reversal of the reductions to the bank levy and the introduction of a tax on bankers’ bonuses.

On action against tax avoidance and evasion, the SNP is keen to scrap Scottish limited partnerships, which it says can be used for money laundering and tax evasion.

According to the Department of Business, Energy and Industrial Strategy (BEIS), between 2011 to 2012 and 2015 to 2016, the number of limited partnerships registered in Scotland increased by 237%. Registrations for limited partnerships registered in England, Wales and Northern Ireland for the same period was 42%.

Unlike other limited partnerships, Scottish limited partnerships possesses a separate legal personality, allowing them to own assets, enter into contracts, sue or be sued, own property, borrow money and issue certain kinds of security. Typically, limited partnerships are not treated as separate legal personalities and as such are unable to exercise ownership or agency.

For tax purposes, Scottish limited partnerships are taxed as though they do not have a separate legal personality. No tax is payable by the partnership itself. Instead, the tax authorities look through the partnership structure and partners are taxed on their share of partnership income and gains arrived at in line with their profit-sharing ratios. Provided the partnership is not trading in the UK, however, no UK tax will be payable by non-UK resident partners.

‘When it was revealed that Scottish limited parternships were being used for criminal activity, fraud and tax avoidance, we knew we had to act fast to protect Scotland’s reputation as a world class place to do business,’ SNP MP for Kirkcaldy Roger Mullin said. ‘After repeatedly disregarding their duty to act, the Tories were eventually forced to do a U-turn and instigate a review into limited partnerships and criminality.’

Among its other key policies is a second referendum on Scottish independence 'at the end of Brexit'.

The SNP manifesto is available here.

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