Opening a UK Limited Liability Partnership (UK LLP)
UK LLP Tax exemption
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Type of company
A UK Limited Liability Partnership (LLP) is a modern legal business entity characterised by limited liability for its members. UK Limited Liability Partnerships are treated as partnerships for tax purposes, yet they share several similarities with companies. A UK LLP must maintain a minimum of two formally designated members continuously. These designated members hold responsibilities akin to executive directors and the company secretary of a company, particularly if the UK LLP generates income within the UK. These responsibilities include:
- Appointing an auditor (if necessary).
- Signing the accounts on behalf of the members.
- Submitting the accounts to the Registrar.
- Informing the Registrar of any membership changes, changes to the registered office address, or the name of the LLP.
- Preparing, signing, and delivering an annual return (Form LLP363) to the Registrar.
- Representing the LLP in case of winding up or dissolution.
Failure to fulfill these legal obligations can render designated members liable. In cases where there are less than two designated members, all members are automatically considered designated members. The LLP may decide to appoint all members as designated members or select only some members for this role.
With the agreement of the other members, any member can become a designated member at any time. Designated members hold the same rights and obligations toward the UK Limited Liability Partnership as any other member, regulated by the LLP agreement and general law. However, additional responsibilities are imposed by law on designated members.
Setting up a UK LLP
Corporate Information
Principal and Corporate Legislation
Limited Liability Partnership Act 2000. The Income and Corporation Taxes Act 1988 (as amended).
Designated Members
Every LLP must maintain a minimum of two formally appointed designated members who are responsible for various legal obligations.
Members or Partners
There can be an unlimited number of members.
Powers of LLP
An LLP incorporated in the United Kingdom enjoys the same powers as a natural person.
Language of Legislation and Corporate Documents
English.
Shelf LLPs Available
Yes, the list is available upon request.
Time to Incorporate
Approximately 3 to 5 working days, factoring in time for document certification (subject to name approval).
Procedure to Incorporate
Through the submission of the Incorporation Document Form LLP2, along with the registration fee to the Registrar of Companies. Confirmation to the Registrar includes:
- The LLP’s name.
- The address of the registered office.
- Names and addresses of the initial members, along with their birthdates if they are individuals.
- Confirmation of designated members (minimum of two) responsible for statutory compliance.
Name Restrictions
Names identical or overly similar to existing LLPs or companies, offensive or implying criminal activity, or suggestive of Royal Family or UK Government patronage are prohibited. Restricted names include terms like assurance, bank, benevolent, etc., which require approval from the Secretary of State.
Language of Name
While the company name can be in any language, documentation must be in English. If incorporated in Wales, documentation in Welsh is accepted.
Registered Office Required
Yes, it must be located in the United Kingdom.
Suffixes to Denote Limited Liability
Limited Liability Partnership or the relevant abbreviation.
Disclosure of Beneficial Owner to Companies House
In 2016, Companies House set up the People with Significant Control (PSCs) Register, which was the first of its kind in the world. This requires UK companies, and other legal entities, to identify who owns and controls them (are their PSCs), register their details with Companies House, and keep these details up to date. The two main objectives of the PSC register are to provide transparency around the ownership and control of UK corporate structures and to help prevent misuse of UK corporate structures.
Complicance
Capital
The minimum capital contribution is £2.
Taxation
The members are exempt from UK tax, provided that no business or trade is conducted within the United Kingdom. To maintain this status, an LLP must operate as a commercial venture with the intent to profit, not in liquidation.
Double Taxation Agreements
The United Kingdom has more double tax treaties than any other sovereign state. However, access to treaty benefits for UK LLPs is based on member residence, preventing international UK LLPs from benefiting from UK treaty access.
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