B7.106 Limited partnerships
The main body of law governing a limited partnership is the Limited Partnerships Act 1907. However, it is not a complete code of the law on limited partnerships. It therefore expressly preserves the provisions of the Partnership Act 1890 and rules of equity and common law applicable to partnerships, except where they are inconsistent with the express provisions of the Limited Partnerships Act 19071.
Until a limited partnership is registered as such, the general partnership law (B7.101) will apply to it2.
Limited partnerships are a traditional structure for joint ownership of a series of investments where a unit trust may not be wholly appropriate.
From 6 April 2017, limited partnerships which are collective investment schemes may be designated as a private fund limited partnership (PFLP)3; see 'Definition of a private fund limited partnership' below.
Tax transparency—limited partnership
Limited partnerships (and general partnerships and most LLPs; see B7.101, B7.107 respectively) are what is known as 'tax transparent'. This means that the partnership is not itself liable to tax. Instead the legislation 'looks through' the partnership and taxes the partners directly.
Partners are taxable on their share of any profits or gains of the partnership as and when these arise, whether they are distributed or not.
Definition of a limited partnership
The Limited Partnerships Act 1907 allows a partnership to be formed to include one or more members whose liability in respect of the partnership's debts is limited to the amount of his contribution of capital4. This amount must