In recent years, partnerships have been a commonly-used vehicle for tax avoidance. Film partnerships were often used to create tax losses where no economic loss had been made by the partner. The Limited Liability Partnerships Act of 2000 made partnerships very attractive vehicles and ‘mixed partnerships’, i.e. those with a mixture of individual and corporate members (with the corporate often owned by the individual), became commonplace. Typically, profits went to the corporate members as corporation tax rates were lower and losses went to the individual members who then received higher rates of income tax relief – and why wouldn’t you if you can?!

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