Limited Liability Partnership (LLP)
Since 2001, with a new legislation coming into force, it’s become possible to register LLPs governed by the Limited Liability Partnership Act 2000. This business structure combines features of a traditional partnership and a limited liability company.
LLPs have a legal identity and are fully independent of its partners which allows them to enter into contractual relationships and own assets, e.g. a real estate. It relates to a limited liability company.
At the same time LLPs have no corporation tax; instead each of their partners must declare their profit received from the LLP. It relates to a partnership.
Partners’ liability is limited by the amount they paid up on registration.
A partnership agreement is not obligatory on registration; in this case relationships between partners will be governed by the legislation in force. However, it’s recommended to stipulate terms and conditions of cooperation between partners in a partnership agreement, including their corresponding paid up shares.
Key requirements for registration of a partnership:
- It must be registered with the Companies House.
- It must have at least two partners.
- Partners can be either individuals or legal entities.
- There are no requirements for citizenship/ jurisdiction and residency of partners.
- At least two partners or all partners must become Designated Partners. They have legal and criminal responsibility for the corporate reports being correct and in the right order.
- It must have a unique name.
It was already mentioned that taxes must be paid by partners and not by the LLP itself. It means that if an LLP has no activity in the UK and its partners are not UK tax residents, then partners will have to pay taxes only in the country of their tax residency.
Besides, there is usually no Stamp Duty on real estate brought into or taken out of the LLP.
Any LLP registered in England or Wales must submit its financial reports at the end of each tax year as well as tax returns of its partners to the HMRC.
If an LLP operates in the UK and receives corresponding profit, partners will have to pay income taxes in the UK.
Specialists of Imperial & Legal will be happy to recommend you the right business structure and register it with the Companies House. We can also assist in drafting a partnership agreement and evaluating tax consequences for the partners.
To discuss your requirements, please contact our specialists or call us on +44 (0)203 490 41 21.