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United Kingdom

• Limited Liability Partnership (LLP)
• Not perceived as offshore company
• No UK tax liability for non-residents

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OFFSHORE-FOX.COM
with Michael Isaacson

The United Kingdom recently saw the arrival of a new form of a business entity: the Limited Liability Partnership (LLP). If certain circumstances are met, the LLP can effectively operate free of any UK tax liability.

For all intents and purposes, the British LLP is comparable to a United States LLC: It is a combination of a standard limited liability company and a partnership.

Just like limited companies, LLPs provide limited liability to members (in contrast to partnerships where partners' liability is unlimited). However, LLPs are still treated as partnerships as far as taxation is concerned: tax is assessed individually on each member after the distribution of the LLP's profits among them. The LLP as such is not taxed at all.

The legislation requires that an LLP has at least two members; they may be of any nationality and need not be UK residents.

In fact, provided that the LLP members are are located outside of the United Kingdom, and no business is carried with or within the UK, the LLP has no liability for UK taxation.

Nevertheless, an LLP must file annual accounts with the Registrar of Companies; these must be audited if the annual turnover exceeds GBP 1 million.

Limited Liability Partnerships proved a popular business association for local UK professionals who traditionally organised themselves as standard partnerships (firms of lawyers, accountants and others) and as such had been exposed to unlimited personal liability.

For the UK non-resident, a British LLP is a welcomed addition to a collection of non-offshore yet tax-free corporate entities.

 



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