legal - limited liabilty partnerships (LLPs)
LLPs were introduced in April 2001 and they work in a similar way to a partnership but offer the protection of limited liability to the partners. Many professional firms trade as an LLP and as a partner of an LLP, you are still taxed as an individual.
Every LLP must have at least two, formally appointed “designated members”, at all times. If there are fewer than two designated members then every member is deemed to be a designated member.
Designated members are responsible for:
- appointing an auditor (if one is needed);
- signing the accounts on behalf of the members and delivering the accounts to Companies House;
- notifying Companies House of any membership changes or change to the registered office address or name of the LLP;
- completing and delivering the annual return to Companies House and
- acting on behalf of the LLP if it is wound up and dissolved.
Designated members are also accountable in law for failing to carry out these legal responsibilities.
current issues
LLPs provide partners with the protection of limited liability but enable them to be taxed on an individual basis.
We are increasingly using a limited company as a member of an LLP for tax planning reasons.
businesses
LLPs are ideal for businesses which have a degree of commercial risk so that the partners are reassured that they have limited liability.
The individual partners remain liable to tax at the higher personal rates. To avoid this we often recommend introducing a corporate partner.
international
LLPs are now recognised in other jurisdictions outside the UK.
We have experience of the tax implications of LLPs trading in more than one country.
individuals
If you are invited to join an LLP we can provide you with independent advice on whether the LLP agreement is in your best interests.