UK LLP Company Formation

A UK Limited Liability Partnership is a perfect solution for international foreign companies and individuals looking to gain access to European markets without having to pay local UK taxes.

What is a Limited Liability Partnership?

In general, a Limited Liability Partnership is a hybrid form of business entity that combines elements of a limited company and an ordinary partnership that offers limited liability, organizational flexibility, and tax transparency to its members. A LLP agreement is not required, though highly recommended and may be created by its members according to their own specific needs.

LLP Companies Act UK

The Limited Liability Act 2000 governs the UK LLP; the legislation formed to give partnerships increased organizational flexibility, making it a popular formation option for international trade and investment houses.

The UK LLP has a pass-through tax structure that shifts the tax burden of the LLP to its members, enabling the LLP to bypass UK taxation requirements. An LLP is not seen as a separate entity for taxation purposes, which falls upon its members who are only required to pay taxes on income sourced from the UK. Though the members are obliged to pay taxes on all foreign profits in their home country of residence, they are not subject to any UK tax.

A Limited Liability Partnership UK gives companies many advantages including a flexible structure, limited liability for its members, and minimal corporate formation requirements. There are no company structure requirements for the management of an LLP, nor are there provisions for company meetings, directors, secretary, or capital, all of which makes the UK LLP a highly desirable company formation vehicle.

Key Corporate Features of a UK Limited Partnership Company

UK LLP	Corporate Details
General
Type of Entity	Limited Liability Partnership (LLP)
Type of Law	English Common Law
Governed by	Limited Liability Act 2000The Income and Corporation Taxes Act 1988
Registered Office in UK	Yes
Shelf company availability	Yes
Our time to establish a new company	1 - 2 days
Minimum government fees (excluding taxation)	None
Corporate Taxation	None
Access to Double Taxation Treaties	No*
Share capital or equivalent
Standard currency	GBP, £
Permitted currencies	Any
Minimum paid up	None
Usual authorized	None
Bearer shares allowed	No
No par value shares allowed	No
Directors
Minimum number	None required (Members act as Directors)
Local required	No
Publicly accessible records	N/A
Location of meetings	N/A
Corporate directorship allowed	N/A
Members
Minimum number	Two
Publicly accessible records	Yes
Corporate shareholder allowed	Yes
Location of meetings	Anywhere
Company Secretary
Required	No
Local or qualified	No
Accounts
Requirements to prepare	Yes
Audit requirements	Yes (small companies are exempt)
Requirements to file accounts	Yes
Publicly accessible accounts	Yes
Recurring Government Costs
Minimum Annual Tax / License Fee	None
Annual Return Filing Fee	GBP 30 manually, GBP 15 electronically
Other
Requirement to file annual return	Yes
Migration of domicile permitted	No

* UK LLPs whose members are residence of a foreign country, who do not derive any income from within the UK, do not get access to Double Taxation Treaties, as access to the treaties are dependant upon the country of residence.

Advantages

• The UK is a respected jurisdiction and international financial and trade centre
• Political and economic stability
• No local taxation if business and residence are outside the UK
• Benefits of having access to European markets
• Quick registration process
• Low costs
• Small companies are exempt from being audited
• No capital requirements
• Details of beneficial owners are kept confidential
• Nominee Services are available
• Limited partnership liability of members is limited to the capital contributed
• LLP is legally separate from its members
• LLP is no taxes as a separate entity, members are taxes individually on profits
• Minimum LLP requirements
• Partnership agreement are not required
• Tax is based upon residence and location of commercial activities
• Members may include individuals an corporate entities
• Flexibility of LLP structure
• Formation of an LLP gives confidence to investors and partners and allows for credit to be drawn

Top Uses

• International Trade
• International Professional Services
• International Commercial Activities

To register a UK LLP an individual or corporate entity must:

• Fill out and complete an LLP2 form
• Pay a registration fee
• Chose a name for the LLP
• Address of the registered office
• The names, address, and details of each member of the LLP
• Names and details of beneficial owners (which are kept confidential)
• A compliance statement confirming that the LLP is being established to conduct lawful activities with a view to create a profit

Limited Liability Limited Partnership Agreement

A Company Agreement is recommended though not required and need be submitted to the Companies House. The Agreement would outline the powers and rules regulating the LPP, detailing such powers rather than incorporating an LLP with default provisions that might not be aligned with the interest of the LLP. Such issues to be delineated might include: the activities of the LLP; the method for appointing and nominating designated members; division of profits; and outline of the duties of members.

A United Kingdom LLP, whose members are not a resident of the UK and do not carry business within the UK, are not liable to pay any local UK taxes. A LLP is not considered to be a separate entity for taxation purposes and thus are not subjected to taxes. A LLP is treated as a partnership in that each member is liable to pay his/her own income tax based on the share of the profits. Members only need to pay taxes within the country of their residence. Members of an LLP are only liable to pay income tax upon the earnings made within the UK.

UK VAT for an LLP

A UK LLP needs to make an application to the Customs and Excise Office in regards to registering for the UK VAT. If the Company makes more than GBP 81,000 that is derived from local earnings, then the company must register for the UK VAT.

Anonymity, Confidentiality and Disclosure

All accounts are made publically available. All names and details concerning the members are made available to the public; however, there is no requirement to submit beneficial details. Nominee services can be used in order to ensure confidentiality and anonymity. An audit of accounts is also required, though a LLP may apply for a company exemption if it is considered a ‘small’ business.

Members

Individuals and Companies who form part of an LLP are called members. There is a minimum of two members who must both put in some equity—minimum GBP 1. There is no maximum amount for any member of a Limited Partnership company.

Designated members are also considered to be the ‘owners’ of the LLP. The LLP must have at least two designated members who are responsible for the management of the LLP and who will deal with the documents required by the Companies House.

If the Companies House is not notified as to the names of its designated members, then all members would be considered designated members. The designation and holding of such positions may be transferred between members through a Companies House application. The designated members are responsible for:

• Appointing an auditor (if needed, as there is a small business audit exemption)
• Sending the financial accounts, notifying of any membership or address changes to the Register
• Preparing, signing and delivering accounts and annual return (Form LLP363) to the Register

Trading Restrictions

A Limited Liability Partnership UK is restricted in trading or conducting business in banking, insurance, financial services, and consumer credit services.

Principal Corporate Legislation

A UK Limited Partnership is governed by the Limited Liability Partnership Act 2000 and its taxation is governed by the Income and Corporation Taxes Act 1988

Type of Law

English Common Law

Powers of the Company

An UK Limited Partnership has the same powers as a natural person. A Limited Liability Partnership company has a separate legal entity that is independent from that of its members.

Language of legislation and Corporate Documents

All corporate documents must be in English

Registered Office required

Yes, a UK LLP must have a registered office

Audit Requirements

UK LLPs are required to submit audited accounts, though companies earning less than GBP 5.6 million can apply for an audit exemption

Annual Reporting

All UK LLPs must file and annual return and annual accounts to the UK Inland Revenue every year no matter if a company has traded or not. The LLP must prepare and submit a summary of its current member together with the filing fee.

Financial Statements required

All UK companies must make appropriate records of accounts and must be filed with the Register of Companies and the Inland Revenue. Designated LLP members must sign the accounts. UK LLP’s annual accounting reference date will be the last day of the month in which the company was incorporated. There are some provisions that exist where small LLP’s may submit abridged accounts and need not submit full accounting records.

Shelf Companies available

Yes

Time required to form offshore company

1-2 days

Name Restrictions

An UK LLP must not use any name that is already in use, that is similar to, or that is considered to be offensive or suggests patronage to the Royal Family or the UK Government. Also, the following names are restricted or require a special licence to use words such as: assurance, bank, benevolent, building society, Chamber of Commerce, fund management, insurance, investment fund, loans, municipal, reassurance, reinsurance, savings, trust, trustees, university, etc.

Language of Name

The Company name may be in any language, but must have a certified English translation.

Names of Company Requiring a Special Licence or Permission

An UK LLP must seek approval or a licence if it is seeking to conduct business activities in financial or banking services. Names that include the following words require a special licence: assurance, bank, benevolent, building society, Chamber of Commerce, fund management, insurance, investment fund, loans, municipal, reassurance, reinsurance, savings, trust, trustees, university, etc.

Permitted Limited Liability Suffixes

Limited Liability Partnership or LLP

Access to Double Tax Treaties

The UK is a member of many Double Taxation Treaties (DTT), however access to the treaty benefits is dependent upon the residence of its members. Individual members whose residence is in a European Economic Area country that has signed a DTT with the UK may be eligible for the benefit.

Licence Fee

None