UK Limited Liability Partnership (LLP) Formation
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United Kingdom Incorporation
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.
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.
An LLP agreement is not required, though highly recommended and may be created by its members according to their own specific needs.
Taxation
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.
As an LLP is not seen as a separate entity for taxation purposes, taxes then are levied only on income sourced from the UK. In other words if you are a non-resident and open an LLP and all profits are made outside of the country, then the company structure is free from having to pay any taxes. 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.
Table of Contents:
- What is a Limited Liability Partnership?
- UK LLP Taxation
- Advantages of a UK LLP Structure
- Top Uses
- Key Corporate Features
- UK Limited Liability Partnership Requirements
- Limited Liability Partnership Agreement
- UK Taxation of an LLP
- UK VAT For An LLP
- Corporate Details
Advantages of a UK LLP Structure
- 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 agreements are not required
- Tax is based upon residence and location of commercial activities
- Members may include individuals and 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
- Estate planning Collective
- Investment vehicle
- International Holding Company
- Tax planning vehicle
Key Corporate Features
| UK LLP | Corporate Details |
| General | |
| 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 |
| 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 | None |
| Annual Return Filing Fee | GBP 30 manually, GBP 15 electronically |
| Other | |
| Requirement to file annual return | Yes |
| Migration of domicile permitted | No |
Product Packages
Includes:
- Government Registration Fee (First year)
- Registered Office Address (First year)
- Registered Agent Services (First year)
- Company Secretarial Maintenance
- Certificate of Organisation
- Articles of Organisation
- Minutes of First Organisers Meeting
- Ownership Certificates
- Register of Members
- FREE Phone and/or email consultations
Requirements
To register a UK LLP an individual or corporate entity must:
- Fill out and complete a registration 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 creating a profit
Agreement
A Company Agreement is recommended though not required and needs to be submitted to the Companies House. The Agreement should outline the powers and rules regulating 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.
UK Taxation
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. An LLP is not considered to be a separate entity for taxation purposes and thus are not subjected to taxes. An 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.
VAT
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.
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Corporate Details
Anonymity, Confidentiality and Disclosure
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 owner details. Nominee services can be used in order to ensure confidentiality and anonymity. An audit of accounts is also required, though an 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 Liability 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
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.
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 an 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 an offshore company
1-2 days
Name Restrictions
A 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
A 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.
Government Annual Fee
None
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