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What is a UK Limited Liability Partnership?

UK Company Formation

History

Limited liability partnerships were originally set-up to afford professionals such as solicitors and accountants, limited liability but with fiscal transparency – Such structures satisfying the professional and regulatory bodies such as the Law Society of England & Wales. However, the benefits of using LLP’s soon became apparent to many other individuals and today the vast majority of UK LLP’s are set-up by non-professionals simply seeking a combination of limited liability and fiscal transparency.

The Governing legislation

In the Great Britain LLP’s are governed by the Limited Liability Partnerships Act 2000 whilst in Northern Ireland by the Limited Liability Partnerships Act (Northern Ireland) 2002. As stated, they provide full limited liability to the partners but unlike a limited company are also fiscally transparent and may avoid unnecessary double taxation but advice should always be sought from a qualified accountant to ensure that they are suitable.

LLP’s can have a transferable tax base

Unlike a UK limited company a UK LLP will be subject to tax in the location of management and control, which will in effect depend on the physical location of the LLP members. However, no matter where the members are based it is a legal requirement that accounts are submitted in the UK each fiscal year and further that all submissions are also made to the Inland Revenue and Companies House.

Management

Members of a UK LLP have a collective responsibility as set out in their agreed "LLP agreement", but no individual ("several") responsibility for each other's actions. As with a limited company, liability is strictly limited to the amount invested by the members save where there has been a severe breach of their fiduciary duty and/or gross negligence.

Tax

A UK LLP is similar to a partnership: it is fiscally transparent in that it pays no UK tax but its UK members do in relation to the income or gains they receive through the LLP. This may not be the case where the members are not UK based.

Buy a UK Limited Liability Partnership