Introduction to LLPs

This note provides an overview of the legal and taxation issues surrounding Limited Liability Partnerships (LLPs). The various advantages and disadvantages of an LLP structure are also considered.

Further detailed guidance on the legal implications and specific taxation position can be found in the following guidance notes:

• •How to set up an LLP
• •Legal implications of LLP membership
• •Accounts and audit for LLPs
• •Transfer of a partnership to an LLP

The rules discussing the allocation and taxation of LLP partnership income and gains are essentially the same as for general partnerships.

These are therefore discussed in context in the guidance notes in the sub-topic ‘Taxation of partnership income’ and ‘Taxation of partnership gains’ (see the Trading profits of a partnership and Capital gains of a partnership guidance notes).

LLPs were introduced by the Limited Liability Partnership Act 2000 (LLPA 2000 (subscription sensitive)) as a new type of UK legal entity with effect from 6 April 2001. The primary legislation that applies to LLPs can be found in the following:

• •LLPA 2000 (subscription sensitive)
• •LLP Regulations 2001, SI 2001/1090 (subscription sensitive), and
• •LLP (Application of Companies Act 2006) Regulations 2009, SI 2009/1804 (subscription sensitive)
• •LLP (Application of Companies Act 2006) (Amendment) Regulations 2013, SI 2013/618 (subscription sensitive)
• •LLP (Register of People with Significant Control) Regulations 2016, SI 2016/340 (subscription sensitive)

The legislation and regulations import various other parts of company law, such as Companies Act 1985, Companies Act 2006 and Insolvency Act 1986 (all subscription sensitive) so that they apply to LLPs in the same way as for limited companies.