IN059 - United Kingdom Limited Liability Partnerships

There are three recognised ways of undertaking business on a collective basis in the United Kingdom. These are:

• companies
• partnerships
• limited liability partnerships

A limited liability partnership is a separately registered entity with an address in the United Kingdom. Partners, who are referred to as members, can be individuals or corporations and do not themselves need to be resident in the United Kingdom.

It is likely that the initial demand for the organisation of limited liability partnerships will come from existing businesses to provide, in particular, professional firms such as lawyers or accountants with limited liability.

Tax Position

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.

Further Details

There is no upper limit on the number of individuals or corporations that may be members of a limited liability partnership and there is no requirement that all of the members share in the profits.

The audit exemptions proposed are similar to those required of companies.

Requirements on Registration

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 that are to be the first members of the limited liability partnership on incorporation. Where they are individuals, their date of birth also needs to 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.


• annual accounts need to be filed confirming:


a. turnover

b. profit and loss for the year before members’ remuneration/profit shares

c. where the profit figure exceeds £200,000, the amount attributable to the member with the largest profit share

d. aggregate capital or loans put in by members and aggregate amounts withdrawn during the year by members

Post Registration Requirements

The name of the limited liability partnership must end with “Limited Liability Partnership” or “LLP”. The name of the LLP must be shown outside every office or place of business and business letters must show the name of the registered office and registration number with the full name of the LLP.

Advantages of Limited Liability Partnerships

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.

For further information on United Kingdom limited liability partnerships, please contact Laurence Binge or Joe Dunne at Dixcart International Limited in Esher, or your usual Dixcart contact.