HM Revenue & Customs is probing Boston Consulting Group's partnership structure, inquiring whether some partners should be treated as employees for tax purposes. The UK tax authority's inquiry follows a landmark Supreme Court ruling this year that dismissed an appeal by Blue Crest Capital, setting a precedent for taxing limited liability partnership members. BCG, which employs about 33,500 people globally and reported $14.4bn in revenues last year, disclosed it had hired lawyers to review its application of salaried member rules.
The firm's legal counsel had affirmed its position on partner taxation, but the outcome and potential liability remain uncertain. Any bill could have a material impact on BCG's UK business finances. The disclosure follows BCG's loss in January against an HMRC decision affecting 63 managing directors and partners regarding capital interests treated as equity rather than income.
BCG's latest UK accounts include a £101.6mn provision for payments to partners under scrutiny. HMRC has taken an increasingly aggressive approach to LLP tax structures, pressing ahead with cases previously on hold. Advisers report affected businesses are seeking to correct tax status and settle historical positions with HMRC.
BCG's UK LLP had more than 100 members last year.
Source: Financial Times Companies · Summarized by HeadlinesBriefing