Perfect Partners? The Limited Liability Partnership Act 2000

- Last updated on GMT

Related tags: Corporation

Limited liability partnerships were introduced in April.Below is a quick summary of a recent change in the law that may be of interest to those of...

Limited liability partnerships were introduced in April.

Below is a quick summary of a recent change in the law that may be of interest to those of you looking to start up a new business or to reorganise your existing business arrangements.

You may have received stuff through the post from your accountant. Probably destined for that filing cabinet in the corner of the room - with the flip-top lid. However, limited liability partnerships - for it is that upon which I am about to discourse - may be just worth a closer examination.

Up to now, if you've been starting up in business, it may be that you've faced a straightforward choice - either carry on a business or form a limited company.

Tax advantage here, allowable expense there. I'm sure you've heard it all. If not, there's an accountant somewhere just itching to tell you!

But now there's a new creature prowling the streets. It's been around since April 6 of this year. It's the new tax year's best kept secret. It's just waiting for you to find it.

Yes, it's the limited liability partnership, introduced by the - wait for it - Limited Liability Partnership Act 2000.

An LLP is a new form of legal business entity with limited liability and any sort of existing business of two or more persons which is carried on with a view to a profit can incorporate as a limited liability partnership.

In terms of tax treatment, there's not much difference.However, a limited liability partnership gives its members the benefits of limited liability but allows them the flexibility of organising their internal structures as a traditional partnership.

It is a separate legal entity and while it will be liable for the full extent of its assets, the liability of the members is limited.

This is likely to be the main attraction of limited liability partnerships as they provide individual partners with a form of protection against the risk of a large claim or breach of contract.

Unlike limited companies, there are no shares, shareholders or directors - only members - and neither will there be any Memorandum or Articles of Association. Despite its name, a limited liability partnership is not a partnership so partnership law will not apply.

All you need to do is get a form LLP 2, fill it in and file it with Companies House. However, it might just be a good idea to consult a solicitor or an accountant along the way.

Surprise, surprise, the benefit of limited liability status also has some additional cost and administrative burdens associated with it.

Lots of filing of information at Companies House - open to the public gaze. The penalty for late filing ranges between £100 and £1,000, with the possibility in extreme cases of a criminal conviction and a fine of up to £5,000.

by David Clifton, of thePublican.com's legal team

Related topics: Legislation

Follow us

Pub Trade Guides

View more