UK
- LIMITED LIABILITY PARTNERSHIPS
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Principal and Corporate Legislation
Limited Liability Partnership Act 2000. The Income and Corporation Taxes
Act 1988 (as amended).
Introduction
A limited liability partnership is a new form of legal business entity
with limited liability.
The main features of limited liability partnerships are that they have
organizational flexibility but are taxed as partnerships. In many other
respects they are very similar to companies.
The
Limited Liability Partnership Act 2000 generally allows two or more
persons carrying on a lawful business with a view to profit to form
a limited liability partnership by subscribing to its incorporation
document - Form LLP 2. (In law, 'person' includes individuals and companies.)
However, limited liability partnerships are not available for all activities
such as non profit making activities.
Every
limited liability partnership must at all times have at least two, formally
appointed, designated members. (Designated members are analogous to
the executive directors and the company secretary of a company). If
there are fewer than two designated members then every member is deemed
to be a designated member. (The limited liability partnership may have
decided that all members will be designated members or that only some
members will be designated).
With
the agreement of the other members, a member may become a designated
member at any time. Designated members enjoy the same rights and owe
the same duties towards the limited liability partnership as any other
member. These mutual rights and duties are governed by the limited liability
partnership agreement and the general law. However, the law also places
additional responsibilities on designated members. In particular, designated
members are responsible for:
- Appointing
an auditor (if one is needed);
- Signing
the accounts on behalf of the members;
- Delivering
the accounts to the Registrar;
- Notifying
the Registrar of any membership changes or change to the registered
office address or name of the limited liability partnership;
- Preparing,
signing and delivering to the registrar an annual return (Form
LLP363);
- Acting
on behalf of the limited liability partnership if it is wound
up and dissolved; and
Designated members are liable in law for failing to carry
out these legal responsibilities.
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Procedure
to Incorporate
By submission of the Incorporation Document Form LLP2, together with
the registration fee to the Registrar of Companies. The following are
to be confirmed to the Registrar of Companies on registration of a limited
liability partnership:
- The
name of the limited liability partnership
- The address
of the registered office
- The names
and addresses of each of the corporations or individuals who
are the first members of the limited liability partnership
on establishment. Where they are individuals their date of
birth must also be confirmed
- The designated
members must be confirmed. The designated members are persons
responsible for the statutory compliance of the limited liability
partnership and need to be a minimum of two, unless membership
of the limited liability partnership drops to one person only
- A compliance
statement signed by a solicitor or first member confirming
that the limited liability partnership is being established
to carry on lawful business with a view to profit.
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Restrictions
on Trading
Yes, for specified categories, which include banking, insurance, financial
services, consumer credit related services and employment agencies.
Powers
of LLP
A Limited Liability Partnership incorporated in the United Kingdom has
the same powers as a natural person.
Language
of Legislation and Corporate Documents
English.
Shelf
LLPs Available
Yes.
Time
to Incorporate
Ten to fifteen working days or one day on payment of an additional fee
to Companies House.
Name
Restrictions
Any name which is identical or too similar to an existing LLP or company;
any name which would be considered offensive or suggests criminal activity;
or any name that suggests the patronage of the Royal Family or the Government
of the United Kingdom. Restricted names include the use of the following
words:- assurance, bank, benevolent, building society, Chamber of Commerce,
fund management, insurance, investment fund, loans, municipal, reassurance,
reinsurance, savings, trust, trustees, university or their foreign language
equivalents for which the approval of the Secretary of State is first
required.
Language
of Name
Whilst the name of company can be in any language, the documentation
must be in English. Any name in a language other than English must be
accompanied by a certified translation to ensure that the name is not
restricted. However, if the company is incorporated in Wales, documentation
in Welsh will be accepted.
Registered
Office Required
Yes, must be maintained in the United Kingdom.
Names
Requiring Consent or License
Banking and all financial services activities such as insurance.
Suffixes
to Denote
Limited Liability Limited Liability Partnership or the relevant abbreviations.
Disclosure
of Beneficial Ownership to Authorities
No.
Compliance
Capital
The minimum capital contribution is £2.
Taxation
The members exemption from UK tax is only applicable provided that no
business or trade is carried out with or within the United Kingdom.
The
tax authorities in the United Kingdom have confirmed that the taxation
base of a limited liability partnership will follow the procedure operated
in the past for partnerships. The limited liability partnership itself
will not be liable for taxation on profits or gains arising within the
partnership, but the profits or gains will be assessed to tax separately
on the individual partners. In order to remain this status a limited
liability partnership must be a commercial venture operating with a
view to profit that is not in liquidation.
License
Fees None.
Financial
Statement Requirements
All UK LLPs are required to file accounts with the Registrar of Companies.
Audited (rather than un-audited) accounts must be delivered to Companies
House if the limited liability partnership falls into any of the following
categories:
The
annual accounts must contain details of:
- Turnover;
balance sheet signed by the designated members: an auditors'
report signed by the auditor (if appropriate); notes to the
accounts; and group accounts (if appropriate).
- Profit
and loss for the year before members' remuneration/profit
shares.
- Where
the profit figure exceeds £200,000, the amount attributable
to the member with the largest profit share.
- Aggregate
capital or loans put in by members and aggregate amounts withdrawn
during the year by members.
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