Limited Liability Partnerships

What is an LLP?

An LLP is a separate legal entity that offers limited liability for all partners.

It is liable for its own debts and contracts with third parties

Must be registered at Companies House, with two or more members at all time that have not been previously disqualified.

What are the main regulations found in the 2001 Default Provisions (applicable in the absence of a formal members agreement)

• Members share equally in capital and profits

• Every member may take part in the management

• No member is entitled to remuneration for managing the LLP

• Consent of all members is needed to change the nature of the business.

• Books and records must be available for inspection at any time by the members at the registered office

• If a member carries out a business that competes with the LLP, they just pay over all profits made.

• Every member has a duty to account for benefits derived from transactions with the LLP, its business or property.

How are LLPs taxed?

Partners are taxed individually on their share of the profits.

A disposal of an LLP asset, such as land, will be regarded by HMRC as a disposal by the members of the LLP while it is trading.

What must an LLP keep/do?

LLPs must file a confirmation statement, keep PSC (persons with significant control) registers and they must inform companies house of any changes to internal registers (registers of names and addresses).