What is the role and tax treatment of the general partner in a PE fund?
Produced in partnership with Emily Clark of Travers Smith
What is the role and tax treatment of the general partner in a PE fund?

The following Tax guidance note Produced in partnership with Emily Clark of Travers Smith provides comprehensive and up to date legal information covering:

  • What is the role and tax treatment of the general partner in a PE fund?
  • The role of the general partner
  • The general partner's share of profits
  • Loan to the general partner
  • Fund and management expenses
  • Management fee
  • What if the fund is a non-UK fund?
  • What if the general partner is a Scottish limited partnership or an LLP?

This Practice Note describes the role and tax treatment applicable to the general partner in a UK limited partnership private equity fund. It highlights, in particular:

  1. the role played by the general partner

  2. how the general partner is remunerated

  3. how the general partner funds a management fee in the early years of the fund

  4. the tax treatment of fund and management expenses

  5. the tax status of the management fee

  6. some of the key considerations where the fund (and general partner) is non-UK, and

  7. the special issues arising when the general partner is a Scottish limited partnership or a limited liability partnership

It does not deal with VAT: for a discussion of the VAT issues relating to a private equity fund, see Practice Note: VAT issues for private equity funds. It also does not deal with the application of the disguised investment manager (DIMF) rules, which may be relevant to amounts received by a general partner. For more, see Practice Note: Disguised investment management fee rules.

For information on the salaried members rules and the mixed members rules, see Practice Note: Taxation of private equity funds—how is a fund structured?—Onshore private equity fund structure—manager.

The role of the general partner

In an ordinary partnership each partner is an agent for the others, each is capable of binding the firm and partners are