A UK Limited Liability Partnership (UK LLP) is a perfect solution for international foreign companies and individuals looking to gain access to European markets without having to pay local UK taxes.
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.
An LLP agreement is not required, though highly recommended and may be created by its members according to their own specific needs.
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 or are seen as 'tax transparent' which 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.
The UK also offers a Limited Company that is one of the most popular company entities in Europe.
For more information on the Advantages of the United Kingdom as an Offshore Financial Center, click here.
|UK LLP||Corporate Details|
|Type of Entity||Limited Liability Partnership (LLP)|
|Type of Law||English Common Law|
|Governed by||Limited Liability Act 2000 The 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|
|Access to Double Taxation Treaties||No*|
|Share capital or equivalent|
|Standard currency||GBP, £|
|Minimum paid up||None|
|Bearer shares allowed||No|
|No par value shares allowed||No|
|Minimum number||None required (Members act as Directors)|
|Publicly accessible records||N/A|
|Location of meetings||N/A|
|Corporate directorship allowed||N/A|
|Publicly accessible records||Yes|
|Corporate shareholder allowed||Yes|
|Location of meetings||Anywhere|
|Local or qualified||No|
|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||None|
|Annual Return Filing Fee||GBP 30 manually, GBP 15 electronically|
|Requirement to file annual return||Yes|
|Migration of domicile permitted||No|
To register a UK LLP an individual or corporate entity must:
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.
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.
All accounts are made publicly 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.
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:
A Limited Liability Partnership UK is restricted in trading or conducting business in banking, insurance, financial services, and consumer credit services.
A UK Limited Liability Partnership is governed by the Limited Liability Partnership Act 2000 and its taxation is governed by the Income and Corporation Taxes Act 1988
English Common Law
A UK Limited Liability 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.
All corporate documents must be in English
Yes, a UK LLP must have a registered office
UK LLPs are required to submit audited accounts, though companies earning less than GBP 5.6 million can apply for an audit exemption
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.
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.
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.
The Company name may be in any language, but must have a certified English translation.
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.
Limited Liability Partnership or LLP
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.
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