Limited liability partnerships

A limited liability partnership, or ‘LLP’ for short, is a form of business structure which has the same flexibility as a traditional partnership for its ‘members’ (ie partners) except for one key difference – members in an LLP can benefit from limited liability in the same way as if they were trading as a limited company.

This structure is commonly used by larger professional partnerships.

LLPs are subject to aspects of company law, however for tax purposes they are generally treated as ‘partnerships’ - the members provide capital and share any profits (or losses).

Members who are individuals pay tax under the same rules as individual self-assessment.

Members who are companies are liable to pay corporation tax on their profits.

Although the liability of the members is normally limited, if the LLP or any members have been negligent then they may be liable for debts the business incurs in a similar way as directors of a limited company would be.

LLP disclosure requirements are similar to those of a limited company. This means that they have to file annual accounts (audited if necessary) and annual returns.

They also have to notify any change in members’ details or the location of the Registered Office – though the LLP agreement remains confidential.

Every LLP must have a minimum of two Designated Members who are formally appointed – they carry responsibilities similar to those of a Company Secretary.

The name of an LLP is used in a similar way to that of a company and is shown in the format XYZ Limited Liability Partnership or XYZ LLP.

Finally, like a company there are the same restrictions on the use of similar or sensitive names.