| |  |
| |
| |
| 
| 1. LLP subscribers may be residents outside the UK.
2. You must appoint a minimum of 2 Members (Partners).
3. Members can be corporate bodies or private individuals.
4. A Member can be of any nationality.
5. They have legal identities separate from its members.
6. Individual members are almost totally protected against liability.
7. Management, distribution, etc., are governed by the partnership agreement.
8. A British LLP must have at least two designated members.
9. You have to register with Companies House, the method is similar to registering a company.
10. LLP can buy and sell property in the name of the organisation.
|
|
|
- DEAR VISITORS, Welcome to Coddan online Limited Liability Partnership (LLP) incorporation agent. We recommend reviewing this site in its entirety, so that you are knowledgeable of the UK jurisdiction and the powers granted to UK LLPs. We will guide you through the process of registering your limited liability partnership and establishing your registered identity. Complete and submit application form. Adequate completion and submission of this form, along with the provision of payment, will enable Coddan to incorporate your proposed LLP within five business days. We will express mail your LLP documents to the mailing address you specify in your incorporation order. If you want to become familiar with the description and the contents of UK LLP registration packages, offered by Coddan and to find above, what kind of service is included in this or that British LLP creation package, to get an idea about the price of annual renewal of the service, and about the general legal requirements to the LLP incorporation within foreign countries, please, select the package you need from the list, situated below the banner. The information in the banner will be renewed according to the package you've chosen.
Please note » The prices payable for the items that you order are clearly set out in the web site. There will be no contract of any kind between you and us unless and until we receive payment from you. We act as your agent in the incorporation of companies and electronic filing of Companies House forms. We are not able to guarantee that any such filing will be acceptable to Companies House, nor are there any contractual obligation upon us to do so. If Companies House rejects incorporation or other electronic filing, we will credit your account with a full refund and the contract between us will be made void. Companies House does not offer a cancellation facility for the incorporation of companies or the electronic filing of documents. We will be unable to cancel any such submission on your behalf and will not refund any payment you have made. All prices shown at Coddan Web Site (www.uk-ltd-formation.co.uk) are in Great British pounds.
Live Help » Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours our business center will be closed. When you click on the button you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is absolutely free! There are no hidden fees. We offer the service as a courtesy to our website visitors.
 United Kingdom Limited Liability Partnership. Introduction
From 6th April 2001 it will be possible to register UK Limited Liability Partnerships (LLPs) at Companies House. This new business entity, which will combine limited liability, corporate personality and the advantages of partnership taxation, may prove attractive not only to the professions but also to many other businesses. Limited Liability Partnership is a body corporate (with legal personality separate from that of its members) which is formed by being incorporated under the Limited Liability Partnerships Act 2000; and a Limited Liability Partnership has unlimited capacity. The members of a Limited Liability Partnership have such liability to contribute to its assets in the event of its being wound up as is provided for by virtue of the Limited Liability Partnerships Act.
For a Limited Liability Partnership to be incorporated: TWO or more persons associated for carrying on a lawful business with a view to profit must have subscribed their names to an incorporation document, there must have been delivered to the registrar either the incorporation document or a copy authenticated in a manner approved by him, and there must have been so delivered a statement in a form approved by the registrar, made by either a solicitor engaged in the formation of the Limited Liability Partnership or anyone who subscribed his name to the incorporation document. The incorporation document must be in a form approved by the registrar (or as near to such a form as circumstances allow), state the name of the Limited Liability Partnership, state whether the registered office of the Limited Liability Partnership is to be situated in England and Wales, in Wales or in Scotland, state the address of that registered office, state the name and address of each of the persons who are to be members of the Limited Liability Partnership on incorporation, and either specify which of those persons are to be designated members or state that every person who from time to time is a member of the Limited Liability Partnership is a designated member.
The profits of the business of an LLP will be taxed as if the business were carried on by partners in partnership, rather than by a body corporate. This ensures that the commercial choice between using an LLP or a partnership is a tax neutral one. The taxation clauses in the Act are expressed in broad terms so that the existing rules for partnerships and partners will, in general, simply apply to LLPs, and members of UK LLPs, which are carrying on businesses, as if these were partnerships and partners respectively.
The transfer of an existing business to an LLP will only be treated for tax purposes as giving rise to a cessation of the business of the partnership which is making the transfer if in otherwise identical circumstances a transfer between one partnership and another would do so. The transfer of assets between a partnership and an LLP will only give rise to chargeable gain or capital allowance consequences if, in otherwise identical circumstances, a transfer of assets between one partnership and another would so do. Similarly, Inland Revenue Statements of Practice and Extra Statutory Concessions will apply to LLPs and members of LLPs as they apply to partnerships and to partners.
- Current Situation
The final draft of The Limited Liability Partnerships Regulations 2001 have now been laid before Parliament and published by the Stationery Office. In their December 2000 Tax Bulletin (issue 50) the Inland Revenue set out their views on how members of an LLP which carries on a trade or profession will be taxed. This contains much useful information and can be accessed at (www.inlandrevenue .gov.uk/bulletins /tb50.htm). However, it specifically states that it "does not cover the detailed tax treatment of investment businesses for which the LLP structure was not originally intended". Therefore the Revenue appear to be signalling that the tax treatment for investment LLPs will not be as favourable.
- British Limited Liabilities Partnerships Main Characteristics
An English LLP registered at Companies House will receive a certificate of incorporation, like a company. It will be a corporate body and will be required to file certain information at Companies House. However, it will not have share capital and will be organised and taxed like a partnership. An agreement, which will not be publicly filed, will be a practical necessity.
In addition, all business letters and order forms must show the following: limited liability; body corporate; taxed as a partnership; organisational flexibility of a partnership; partnership agreement (if any) confidential to members; accounts preparation and filing requirements broadly as for a company; ability to create floating charges. The ability to create a corporate body with limited liability which at the same time will be taxed (and largely organised) as if it were a partnership is a strong combination for the right circumstances. Those setting up a new business may wish to consider an LLP as an alternative. Many existing partnerships may also wish to consider whether the LLP will be suitable for them. There will be stamp duty relief on the instrument transferring property from an existing partnership to a newly incorporated LLP if relevant conditions are met. Interestingly, there is no minimum amount for contribution by members in a winding up. However, there are detailed provisions designed to prevent members siphoning off funds in the event of insolvency. Parts of the Insolvency Act 1986 will apply.
- Limited Liability Partnership Membership
On the incorporation of a British Limited Liability Partnership its members are the persons who subscribed their names to the incorporation document (other than any who have died or been dissolved). Any other person may become a member of a Limited Liability Partnership by and in accordance with an agreement with the existing members. A person may cease to be a member of a Limited Liability Partnership (as well as by death or dissolution) in accordance with an agreement with the other members or, in the absence of agreement with the other members as to cessation of membership, by giving reasonable notice to the other members. A member of a Limited Liability Partnership shall not be regarded for any purpose as employed by the Limited Liability Partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership.
United Kingdom LLP Members As Agents
Every member of a Limited Liability Partnership is the agent of the Limited Liability Partnership. But a Limited Liability Partnership is not bound by anything done by a member in dealing with a person if the member in fact has no authority to act for the Limited Liability Partnership by doing that thing, and the person knows that he has no authority or does not know or believe him to be a member of the UK Limited Liability Partnership.
Where a person has ceased to be a member of a Limited Liability Partnership, the former member is to be regarded (in relation to any person dealing with the Limited Liability Partnership) as still being a member of the Limited Liability Partnership unless the person has notice that the former member has ceased to be a member of the Limited Liability Partnership, or notice that the former member has ceased to be a member of the Limited Liability Partnership has been delivered to the registrar. Where a member of a Limited Liability Partnership is liable to any person (other than another member of the Limited Liability Partnership) as a result of a wrongful act or omission of his in the course of the business of the Limited Liability Partnership or with its authority, the Limited Liability Partnership is liable to the same extent as the member.
Designated members. If the incorporation document specifies who are to be designated members any member may become a designated member by and in accordance with an LLP agreement with the other members, and a member may cease to be a designated member in accordance with an agreement with the other members. But if there would otherwise be no designated members, or only one, every member is a designated member.
If the incorporation document states that every person who from time to time is a member of the Limited Liability Partnership is a designated member, every member is a designated member. A Limited Liability Partnership may at any time deliver to the registrar: notice that specified members are to be designated members, or notice that every person who from time to time is a member of the Limited Liability Partnership is a designated member. A notice shall be in a form approved by the registrar, and shall be signed by a designated member of the UK Limited Liability Partnership or authenticated in a manner approved by the registrar. A person ceases to be a designated member if he ceases to be a member. - Choosing an Limited Liability Partnership Status
Limited Liability Partnerships (LLPs) can provide an ideal structure for numerous businesses - not simply professional practices as is a common misconception. The only activities that cannot adopt LLP status are those that are unlawful, not intended to be profitable and which do not constitute the carrying on of a trade, profession or occupation.
So, if you're contemplating setting up in business or reconsidering the structure of an existing business, an LLP could be an option worth investigating. For professional service partnerships, conversion to an LLPs may offer an attractive prospect at the moment as the number of negligence claims against professional firms are increasing, and as a result professional indemnity (PI) cover is becoming more expensive.
Unlike a standard partnership, an LLP is a corporate body with the ability to contract in its own right. The partners - known as members - are not put at risk by the negligent acts of their fellow members and their liability is limited to the amount they agree to contribute upon a winding up. For most tax purposes, however, the corporate status is ignored and members can essentially enjoy the same Income Tax, National Insurance and Capital Gains Tax treatment as partners in a general partnership.
Such advantages do not come without effort - there are registration and filing requirements that need to be adhered to. However, for many businesses LLPs offer an excellent halfway house between an unincorporated business and a company. LLPs are, technically, corporate bodies. This means they offer several commercial advantages over ordinary partnerships. Their corporate status gives them added credibility among customers and suppliers and they can find it easier to borrow because they can give the bank a floating charge over their assets - something ordinary partnerships cannot do.
When limited liability is factored in, but with the flexibility to operate day to day like an ordinary partnership (no Annual General Meetings and the related paraphernalia associated with limited companies), LLPs are suddenly a pretty serious proposition for the smaller business. Another consideration is that LLPs, like limited companies, have to make their annual accounts public by filing them at Companies House. For some businesses this is actually an advantage - although for others it's a "showstopper". LLPs are also being used increasingly by companies undertaking joint ventures, as they offer the benefits of limited liability without the disadvantages of having an subsidiary company. An LLP is a flexible vehicle that should at least be considered for every business start-up; every joint venture; every professional practice; every business with chargeable assets and for collective investment arrangements.
- Limited Liability Partnership Charges
If an LLP creates a mortgage or charge over its property this will require registration at Companies House within 21 days of its creation if it covers certain types of property such as land or buildings or book debts or if it is a floating charge. The original mortgage or charge document must be submitted to Companies House along with the relevant form. If a charge is not registered in time it will be void against the liquidator or administrator of the LLP or against any of its creditors. Late registration is only permitted with the sanction of a court order.
An LLP is required to keep a register of charges at its registered office and to enter in this details of all charges created (this applies even to charges that are not registrable at Companies House). It must also keep available for inspection by any member or creditor of the LLP copies of any charge instruments relative to charges it has created that are registrable at Companies House. If a registered charge is satisfied, Form LLP 403 (a) or LLP 403 (b) (declaration of satisfaction) may be submitted to the Registrar in order that the register of charges may be updated. Special provisions apply to mortgages and charges created by Scottish LLPs.
- United Kingdom Partnership Agreement Financial Issues
All the financial issues below should be taken into consideration in a partnership agreement.
Capital Investment: The agreement should state how much financial input each partner is have. Capital investment from each partner is how the business will finance itself and purchase the assets needed to run the business.
Income and share of profits: You will need to consider how much, if any, each partner will take from the business as a salary. This will be before profits are distributed and can be used to reflect the different roles and work input of each partner. Also, you may wish to award partners interest on their capital contributions. This can be paid before profits are distributed to reflect any differences in capital investment. Unless expressly agreed, the Partnership Act states that each partner will share profits equally. If you want to share profits in different ratios, for example, to reflect seniority, then this will have to be expressly stated. You will also need to address the issue of how any losses will be shared.
Withdrawals: A potential source of disagreement between partners is the amount of money each is entitled to draw from the business. Some may wish to store a higher percentage of profits in the business to maintain a healthy balance, whilst other partners may want to withdraw their share of the profits immediately. It is important, therefore, to agree on a limit on drawings, for example, a set monthly amount.
Shares in asset value changes: In the situation where a fixed asset of the firm, such as a warehouse, is sold at a profit, how is this profit to be shared? Under the Partnership Act this will be in equal proportions unless stated otherwise. It may be important, therefore, to expressly agree on what is to be done in this situation if this profit is not to be shared equally.
Ownership of business assets: The business may acquire assets during its life, partners may allow the business to use assets that they own or a partner may use the value of one of their own assets to represent their capital investment in the business. It is, therefore, important to stipulate which are the partnership's assets and which belong to an individual partner. Disagreement over the ownership of assets may occur when dissolving the partnership. If the partnership is likely to prove quite complicated or there are substantial amounts of money or assets involved, you should seek advice from a solicitor. The above information, however, will help you be informed about the most important issues and enable you to consider relevant matters with your other partners.
- Partnership Agreement Operational Issues
All the operational issues below should be taken into consideration in a Partnership Agreement.
Degree of commitment: It is important to consider how much work each partner is to do in the business. For example, a 'sleeping partner' whose involvement is purely financial, will not want to be required to take part in the daily running of the business. Also, some partners may want to work part time whilst others are to work full time. The Partnership Act will imply that each partner has the right to take part in the daily management of the business unless stated to the contrary. An agreement should set out, therefore, the degree of commitment of each partner. For a full time working partner this may be expressed as 'devoting his/her whole time and attention to the business.
Sickness, absence and holidays: When considering the degree of commitment that the partners are to have, you should address the issue of absence from the business. It is important to consider what will happen, for example, when a partner needs maternity leave or is suffering from long-term incapacity. You will have to qualify the duty of any full time partner to devote all his/her time and attention to the business with whatever is decided on about time off for holidays, sickness or other absenteeism.
Roles: It is important to state the different functions each partner is to have within the firm and the extent of their authority. For example, one partner may be in charge of sales whilst another is in charge of purchasing. The agreement might state that a particular partner only has a set amount of authority, for example, to enter into contracts less than £10,000.00 in value, or alternatively, that a partner has authority to do whatever they feel is in the best interests of the business within their area. Any partner ignoring a restriction or the scope of their role may be liable for breach of contract.
Decision-making: Unless otherwise agreed, all partnership decisions will be made on a majority basis by one partner one vote. However, if it is a decision on changing the nature of the business or the introduction of a new partner, then every partner must agree. It may well be, therefore, that this is not what partners in a particular business want. For example, it may be a good idea to state that certain decisions can be made by one partner alone, such as buying stock, other decisions require a majority vote, such as employing staff, whilst others require the consent of all the partners, such as buying new premises.
If the partnership is likely to prove quite complicated or there are substantial amounts of money or assets involved, you should seek advice from a solicitor. The above information, however, will help you be informed about the most important issues and enable you to consider relevant matters with your other partners.
- United Kingdom Partnership Agreement Termination Issues
All the term and termination issues below should be taken into consideration in a partnership agreement.
Duration: The Partnership Act provides that unless agreed to the contrary, any partner can terminate the partnership at any time by giving notice to the others. This notice will take effect immediately and does not have to be in writing. This means that a partnership can seem very insecure and uncertain if a particular duration for it is not agreed on.
There are a number of ways of giving a partnership more security. Firstly, you can put a clause in the agreement stating that a partner must give a set period of notice before ending the partnership. A period of 6 months or more, for example, would allow the partnership time to find a new partner. Alternatively, you can agree that the partnership is to last for a fixed term during which it cannot be ended by one of the partners. Once the period has ended it could then continue on the same terms, but could be terminated by a partner giving a period of notice. Lastly, you could provide that the partnership is to continue for as long as there are at least two partners in the firm. This would allow partners to leave without requiring the business to end. You should also consider the possibility of a partner dying or becoming bankrupt. The Partnership Act says that if this happens then the partnership will end. It is worthwhile, therefore, to consider a clause that the partnership will continue in this situation, as long as the other partners can pay for the deceased's or bankrupt's share of the business.
Expulsion: In certain circumstances, the partners in a business may feel it necessary to expel a particular partner. This may be because he/she has broken the partnership agreement, for example, by not devoting enough time to the business. If this issue is not addressed in the partnership agreement, then the law says that the only way to expel a partner is to dissolve the business. An agreement should, therefore, set out in what circumstances a partner can be expelled, how the decision to expel is to be made (majority vote or all remaining partners in favour) and state that the partnership is to continue without him/her. You will also have to deal with payment of the expelled partners share of the business.
Paying For an Outgoing Partners Share: When a partner leaves a business whether through death, expulsion or retirement and that business is to continue, the outgoing partner must receive payment from the others for his/her share. The terms of this payment should, therefore, be agreed in advance.
It is important to consider: whether the other partners have to buy the other partners' share or whether it is an option to buy. When the partner is to receive payment, for example, immediately, after a set period of time or by instalments. How the share of the business is to be valued, for example, by a named professional or by an agreed formula by the partners.
Restrictive Covenants: An outgoing partner will be free to set up a competing business or to work for a competitor unless a restraint of trade clause is inserted into an agreement.
In order to be legal, such a clause must: seek to protect a legitimate interest. This is normally the firm's business links and confidential information. Be reasonable in terms of duration and geographical area. If the clause is unnecessarily restrictive and would deprive an outgoing partner of a living for a lengthy period, then it will not be enforceable. The area must not be very wide, for example, it should be limited to the area in which the firm actually did business and not prevent a former partner from working elsewhere. It must also be limited to the kind of business that the partnership operated in, for example, it cannot prevent a former partner from finding employment in a different trade. Anything longer than 12 months may also prove quite difficult to enforce. If the partnership is likely to prove quite complicated or there are substantial amounts of money or assets involved, you should seek advice from a solicitor. The above information, however, will help you be informed about the most important issues and enable you to consider relevant matters with your other partners.
- Number of Partners
A partnership, whether limited or not, may not normally consist of more than 20 persons.
However, under Section 717 of the companies act 1985 there are a number of exceptions to this rule, including: a partnership carrying on practice as solicitors and consisting of persons each of whom is a solicitor. A partnership carrying on practice as accountants where the partnership is eligible for appointment as a company auditor. A partnership carrying on business as members of a recognised stock exchange and consisting of persons each of whom is a member of that exchange. A partnership carrying on business as surveyors, auctioneers, valuers, estate agents, land agents, or estate managers and consisting of persons of whom at least three-quarters are members of the Royal Institute of Chartered Surveyors or the Incorporated Society of Valuers and Auctioneers and of whom not more than one-quarter are limited partners. Partnership carrying on business as insurance brokers and consisting of persons each of whom is a registered insurance broker or an enrolled body corporate. For the meaning of "registered insurance broker" and "enrolled body corporate" see Section 29(1) of the Insurance Brokers (Registration) Act 1977.
- Taxation and NIC
Partners are considered as self employed for tax purposes. Partnerships do not pay corporation tax. Because of this, you will be responsible for your own tax and National Insurance and will therefore be required to register with the Inland Revenue. You are required to register with the Inland Revenue as self-employed within 3 months of starting a new business. Failure to do so may make you liable to pay £100.00. If you don't register and are not paying tax, you will breaking the law and could be liable to further penalties.
Registration is achieved by completing and sending to the IR form CWF1. This form registers you for paying flat rate Class 2 National Insurance contributions. The weekly flat rate is £2.00 p.w. You should fill in the Class 2 contributions Direct Debit application form. In the April after your business starts (financial year is from 6th April to the following 5th April) the Inland Revenue will send you a self-assessment tax return to fill in. This will be used to assess any profit -related Class 4 NI contributions that you may need to pay. After your first year in business the IR will ask you to make "payments on account" - to pay most of your income tax and some of your Class 4 NI contributions in advance. The amount requested is based on the prior year's earnings with payments due on 31st January and 31st July. If your profits are down you can request to reduce these payments.
- United Kingdom Stationery, Accounts & Records
The Business Names Act 1985 requires all businesses trading under names other than those of their owners to display their owners' names and an address at which documents can be served. This information must be displayed both at business premises and on business stationery. It must also be supplied in writing at the request of any person with whom you are doing business. Where the partnership consists of more than 20 persons certain exceptions apply to the business stationery requirements.
As a partnership, you must keep the following records: the purchase ledger; the sales ledger; the cash book; the creditors & debtors control ledger. Partnerships will need to prepare the following accounts: the balance sheet; the profit and loss account. Profits that are shared out in accordance to the partnership agreement must be shown in the profit and loss account. The partnership accounts must be prepared within a period of 10 months after the end of the financial year. The accounts may cover any period up to 18 months which may be specified in the partnership agreement. If a period is not specified in the agreement, the partnership accounts must be drawn up for each 12 month period ending on 31st March in each year.
After your first year in business the IR will ask you to make "payments on account" - to pay most of your income tax and some of your Class 4 NI contributions in advance. The amount requested is based on the prior year's earnings with payments due on 31st January and 31st July. If your profits are down you can request to reduce these payments.
- Limited Liability Partnership Accounts & Audit
The accounting and audit requirements for Limited Liability Partnerships will be similar to those applied to companies. They will include financial disclosure for third parties dealing with the LLP and disclosure of earnings of the highest paid member. The annual accounts of an Limited Liability Partnership will be required to be audited if the turnover for a financial year exceeds £1 million.
- Limited Liability Partnership Insolvency & Winding Up
The major corporate insolvency and winding up procedures contained in the Insolvency Act 1986 will apply to Limited Liability Partnerships. This will include a provision granting the court discretion to order repayment of any withdrawals made by a member of an LLP within the 2 years prior to winding up. This will only in the event that the member knew or ought to have concluded that after such a withdrawal there was no reasonable prospect that the LLP would avoid going into insolvent liquidation. The Limited Liability Partnership and its members may also be subject to statutory investigation and to penalties for wrongful and fraudulent trading.
- United Kingdom Limited Liability Partnership Taxation
LLPs will be taxed as though they were partnerships. Provisions in the LLP Act ensure that the transfer of assets from an existing partnership to an Limited Liability Partnership will be tax neutral. Limited Liability Partnerships that do not carry on business as a trade or profession such as an investment company will be subject to corporation tax.
- Limited Liability Partnership Annual Return
Every Limited Liability Partnership must deliver an annual return to Companies House within 28 days of its made-up date. A Limited Liability Partnership's designated members are responsible for ensuring that the annual return: is delivered to Companies House within 28 days after the anniversary of incorporation or the anniversary of the made-up date of the last annual return; and gives a true picture of the membership of the Limited Liability Partnership at the made-up date.
NB: It is a criminal offence not to deliver the Limited Liability Partnership's annual return within 28 days of the made-up date, for which designated members may be prosecuted.
- United Kingdom Limited Liability Partnership Accounts & Accounting Preference Dates
Every Limited Liability Partnership must prepare annual accounts that report on the financial performance and position of the Limited Liability Partnership during the year. The period reported on in the accounts is called the financial year. This starts on the day after the previous financial year ended or, in the case of a new Limited Liability Partnership, on the day of incorporation. Another term for a "financial year" is an "accounting reference period" (ARD). For all new Limited Liability Partnerships, the first accounting reference period is automatically set as the first anniversary of the last day in the month in which the Limited Liability Partnership was incorporated. For example, if the Limited Liability Partnership was incorporated on 10 June 2001 its ARD would be set at 30 June, and the first accounts would cover a period from 10 June 2001 to 30 June 2002 - or up to seven days either side of that date.
|
|
£ 125.00
This is our most popular package with UK residents, and includes:
The filing and registration of your LLP
Helpful Resources