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UNITED KINGDOM
LIMITED LIABILITY PARTNESHIP
ONE OF THE NEWEST LEGAL ENTITIES
USED FOR WORLDWIDE TRANSATIONS
TAX EXEMPTION
THE HIGHEST DEGREE OF CREDIBILITY
TYPE OF COMPANY
A limited liability partnership is a new form of legal business entity with limited liability. Limited liability partnerships are taxed as partnerships but in most other respects they are very similar to companies. They must have at least two, formally appointed, designated members at all times. (Designated members are similar to executive directors and the company secretary of a company). If there are fewer than two designated members then every member automatically becomes a designated member.
TAXATION
Provided that no business or trade is carried out with or within the United Kingdom and the members are located outside of the UK then UK LLPs have no liability for UK taxation. Basically this is because the limited liability partnership itself will not be liable for taxation on profits or gains, the profits or gains of the partnership will be assessed to tax separately on the individual partners. If these are located outside the UK then no UK tax is payable.
ACCOUNTS
UK LLP's are required to file annual accounts with the Registrar of Companies. These must be audited if the annual turnover exceeds UK£1 million or if the balance sheet totals more than UK£1.4 million. Eurofinanzza can appoint a firm of accountants/auditors to carry out this work if required.
FORMATION
We can form a UK LLP with your choice of name in approximately 10 days. Names must end in LLP and must fall within certain restrictions. We would be happy to check the availability of your chosen name via our on-line link to the Companies House system and offer advice on name choice.
UNITED KINGDIM LIMITED LIABILITY PARTNERSHIPS OVERVIEW
CHOOSING A BUSINESS FORM
You May Want To Consider The Limited Liability Partnership (LLP)
One Of The Newest Entity Options
The Limited Liability Partnerships Act of 2000 created for the first time a British version of the American limited liability company (LLC). Like its America cousin it is governed by an Operating or Limited Liability Partnership Agreement and can be structured in a way [to allow non-UK resident individuals, conducting all their business outside of the UK to enjoy the prestige of a genuine British entity without liability to UK taxes]. However, it is important to note that tax consequences may be created in the jurisdiction of management and control and/or the fiscal residence of the beneficial owners depending on double taxation treaties and the specific drafting of the Partnership Agreement.
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 arising within the partnership, but the profits will be assessed to tax separately on the individual partners.
A limited liability partnership must be a commercial venture operating for profit. Changes in the tax rules are anticipated to confirm that operation through a limited liability partnership by a charity or in relation to investment in shares or property will not be allowed.
The advantages of operating in this way are that no personal liability falls on a member of a limited liability partnership for the contracts or debts of the limited liability partnership and there is no joint or several liability for the negligence of any other member. The organisation of a limited liability partnership may well, therefore, be [a popular vehicle] for future use by the professions in the United Kingdom and for international business operated by non-resident partners outside of the United Kingdom. There may well be taxation advantages to be obtained from this route, where multi-national business is being undertaken by an international group of partners.
TAX PLANNING CREDENTIALS
Subject to the use of the correct structure and that there are no UK activities or ultimate UK beneficial owners it seems that the Inland Revenue will not seek UK tax at either a corporate or individual level.
If a United Kingdom LLP Has Only Non-Resident Partners & No UK Business, It Will Not Be Taxed In The United Kingdom
There is no requirement for a UK LLP to have a United Kingdom partner. As explained below no taxation should arise on non-resident partners on income from a UK LLP where the business of that United Kingdom LLP is managed, controlled and carried out outside the United Kingdom.
How Is A United Kingdom LLP Taxed?
The explanatory notes to the first draft of the UK LLP Bill stated that the treatment of an LLP as a partnership and members as partners will apply for all tax purposes. Section 10 of the LLP Act states that where an LLP carries on a "business with a view to profit" the members will be treated for the purposes of income tax, corporation tax and capital gains tax as if they were partners. Section 125 of the 1995 Finance Act has the effect of restricting the charge to tax on a non-resident partner of a United Kingdom partnership to its share of the profits of the business carried out in the UK where the partnership business is carried out partly in the UK and partly abroad.
From this we can see that where a non-resident partner receives profits from a UK LLP in relation to a business that is carried out wholly outside the United Kingdom, no UK income tax or corporation tax should arise.
Do A UK LLP Require an Audit?
The members of an LLP are obliged to prepare for each financial year of the LLP a balance sheet and profit and loss account. These accounts, together with a copy of the auditor's report on them, must be delivered to the Registrar of Companies. An LLP that is regarded as small would be exempt from this audit requirement. To qualify as a small LLP there must be gross assets of no more than £ 1.4m and turnover must not exceed £ 1m. In addition the LLP must not be part of a group where a Public Company is a member or where the group is not small. It should be noted that the partners are still required to prepare and file true and fair accounts.
UNITED KINGDOM LIMITED LIABILITY PARTNERSHIP BENEFICTS
General LLP benefits:
- The United Kingdom is actively pro-business and is relatively free of bureaucracy;
- A virtual office presence can be established in London to give the impression of being a domestic LLP;
- The Certificate of Formation, Articles of Organization (if applicable) and the LLP Agreement are remarkably flexible;
- All legal documents supplied from the appropriate division of corporations can be quickly apostilled pursuant to the Hague Convention of 1961;
- Highly respectable and credible jurisdiction;
- Full range of services office address options;
- UK LLP's can be registered in as little as 7 working days (if expedited);
- Well-educated population;
- Highly developed corporate and general law;
- Prestige of having a UK registered entity;
- Low annual Companies House Duties;
- Fiscal transparency for both domestic and non-resident LLP's;
- Ability of non-resident LLP's to be externally managed in low tax, tax-free or tax exempted jurisdictions.
Incorporation is a very simple process, which we have tailored to provide an easy route to completion of the necessary formalities. Once you are happy with your decision that an LLP is the correct vehicle for your business venture, simply contact our limited liability partnership formation agents! The success of your business is our vision
We offer a range of options to help you lodge your LLP at Companies House quickly and easily and ensure you can administer it with the minimum of fuss once it is registered. Of all the legislation of the last few years, the "creation" of limited liability partnerships is one of the most interesting. The essence of a limited liability partnership for practical purposes is as a vehicle to contain a partnership of any size where partners may be at risk from the careless or accidental negligence of a colleague. For example, partners in International accountancy firms would be protected from personal liability if a claim was successfully pursued by a major client. Partners in a construction business would be protected if a new building collapsed, causing high level claims against them. Other partnerships may be tempted to use a limited liability partnership for the same reason. A limited liability partnership may also be appropriate for a partnership where some partners are not actively involved. They might have once been called "sleeping" partners. This structure will be suitable for a group of people engaging together in a property or finance venture.
A limited liability partnership is unlikely to be useful for a small trading company of any sort because a conventional limited company is likely to perform an appropriate role at less cost.
At EUROFINANZZA we provide one of the highest rated LLP incorporation services to our clients around the world. Our expertise ranges from local to international affairs, thus giving our clients an edge over others in accessing the international market. We provide complete limited liability partnership formation solutions for new and existing businesses, including legal affairs pertaining to their business, whatever the intended form or mode of operation.
We believe that all our clients deserve the best service we can offer, so unlike most other company formation agents, we offer just one level of service - the best! We are not the cheapest provider of company formations but we do provide excellent value for money at affordable prices, without cutting corners and with no hidden extras.
LLP INFORMATION
PRINCIPAL 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 changes to the registered office address or name of the limited liability partnership;
- preparing, signing and delivering to the registrar an annual return (Form LLP363); and
- acting on behalf of the limited liability partnership if it is wound up or dissolved.
Designated members are liable in law for failing to carry out these legal responsibilities.
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.
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
No
TIME TO INCORPORATE
Usually the same day, with 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 abbreviation.
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.
DOUBLE TAXATION AGREEMENTS
The United Kingdom is party to more double tax treaties than any other sovereign state. However, access to treaty benefits for UK LLPs is determined by the residence of members.
LICENSE FEES
None.
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