{"text":[[{"start":10.02,"text":"HM Revenue & Customs is probing Boston Consulting Group’s partnership structure as the agency undertakes a sweeping crackdown on the taxation of professional services firms’ senior staff."}],[{"start":21.54,"text":"The UK tax authority is inquiring whether some of BCG’s partners should be treated as employees for tax purposes, according to company filings."}],[{"start":30.76,"text":"The elite consultancy, which lost an appeal in a separate dispute with HMRC in January, said it could be hit with extra tax, interest and penalties if the agency’s position is upheld in the latest enquiry. Any bill “could have a material impact” on the finances of its UK business, it added."}],[{"start":48.48,"text":"The disclosure of the inquiry follows a landmark £200mn Supreme Court ruling this year. Judges unanimously dismissed an appeal by hedge fund BlueCrest Capital against HMRC’s attempt to tax dozens of its partners as employees."}],[{"start":63.16,"text":"The ruling set an important precedent for the interpretation of rules on whether members of limited liability partnerships — a structure used by many professional services groups, including BCG’s UK business — are taxed as partners or employees. BCG’s UK LLP had more than 100 members last year."}],[{"start":83.68,"text":"Treating senior staff as self-employed partners rather than employees carries tax advantages, such as removing the requirement to pay employer national insurance contributions."}],[{"start":91.76,"text":"BCG, which employs about 33,500 people globally and reported $14.4bn of revenues last year, said in its filings that it had hired lawyers to review its application of the “salaried member rules”. The rules are designed to stop UK LLPs and their members wrongly reducing their tax bills by classifying employees as partners, who own and run the firm and share in its profits."}],[{"start":115.96,"text":"BCG’s filing said the firm’s legal counsel had “affirmed” its position on the taxation of its partners."}],[{"start":122.78,"text":"It said the outcome and the size of the potential liability were “uncertain” but the firm did not make a financial provision to cover the potential bill in its most recent financial accounts, saying it did “not consider it probable” that it would need to transfer funds to settle the matter."}],[{"start":137.64,"text":"The BlueCrest judgment has triggered concern among hedge funds, law firms and consultancies, with several now planning to restructure their partnerships and entering negotiations with HMRC to avoid being hit with lengthy investigations and hefty backdated tax bills."}],[{"start":154.2,"text":"HMRC has taken an increasingly aggressive approach to tax structures involving LLPs and is pressing ahead with cases it had put on hold while the courts considered BlueCrest’s case, according to tax advisers."}],[{"start":167,"text":"Advisers to affected businesses said some were seeking to correct the tax status of personnel and settle with HMRC over historical positions."}],[{"start":176.04,"text":"Separately in January, BCG fell foul of rules around partner pay after it lost an appeal against an HMRC decision in the Upper Tribunal. The dispute affected 63 of BCG’s managing directors and partners."}],[{"start":188.8,"text":"BCG had awarded partners “capital interests”, a form of equity in the firm, which grew in value and could be cashed in, often on retirement."}],[{"start":197.32,"text":"BCG had treated these transactions as sales of ownership stakes to be taxed as capital gains rather than as income under a structure on which accounting firm PwC had advised in 2010."}],[{"start":209.46,"text":"But the tribunal found that the interests were not genuine stakes and should be subject to income tax rules, resulting in higher tax."}],[{"start":216.92,"text":"BCG’s latest UK accounts include a £101.6mn provision for payments to current and former partners who had built up entitlements under the scheme scrutinised by the tribunal. The consultancy also disclosed that it had made £128.6mn in payments or commitments to affected partners this year in a move to settle their entitlements under the structure. The partners reinvested some of the money in the firm, BCG said."}],[{"start":243.28,"text":"BCG said: “We comply with all of our global and local tax obligations wherever we operate. As set out in our latest UK LLP accounts, we are currently in discussion with HMRC and will not be commenting further while those discussions are ongoing.”"}],[{"start":257.72,"text":"HMRC said it “cannot comment on specific individuals or businesses due to taxpayer confidentiality law”. PwC declined to comment."}],[{"start":273,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793602926_9658.mp3"}