Why set up an LLP company in the UK? What are the advantages? Because a Limited Liability Partnership is an ideal solution for professionals who want to expand their business in England.
The formation of an LLP (Limited Liability Partnership) in the UK, is a popular form of business organisation that is much sought after by professionals who normally operate as partnerships, lawyers, doctors, architects, but whose members require limited liability.
Opening an LLP company in the UK is all about making a profit and is therefore the ideal solution for international foreign companies and individuals wishing to access European markets without having to pay local UK taxes.
This hybrid form of business entity combines elements of a joint stock company and an ordinary partnership, offering organisational flexibility and tax transparency to its members.
The UK is a highly respected jurisdiction and an international financial and commercial centre. In the UK, an LLP has an administrative structure that is seen as ‘fiscally transparent’ which shifts the tax burden of the LLP onto its members, allowing it to circumvent UK tax requirements.
Political and economic stability coupled with a fast and low-cost registration process justify why the LLP is a highly desirable conduit for business training to gain access to European markets.
There are a number of specific advantages of training an LLP registered in the UK at Companies House, among them are:
Customary partnerships entail financial risks for each partner, whereas this business model limits personal liability for losses in proportion to each partner’s contribution of invested capital. Limited liability protects the member’s personal assets from the burdens of the business. LLPs are a separate legal entity from members.
An LLP does not have directors, shareholders or guarantors; instead it has members, who are more commonly referred to as ‘partners’. At least two members must be present to register an LLP, but there is no upper limit to the number of members allowed and profits can be shared on a discretionary basis.
This type of organisation has a tax efficiency because it is not seen as a separate entity for tax purposes, which falls on its members to pay only tax on income from the UK. Although members are obliged to pay tax on all foreign profits in their country of residence, they are not subject to any corporation tax in the United Kingdom.
The internal set-up is more flexible than that of limited liability companies. There is less formality in appointing or removing members or in modifying their rights and duties. Moreover, decisions do not require shareholders’ meetings and associated resolutions, etc. A new member can be introduced by simply executing a deed of accession to the LLP.
The Members’ Agreement (also known as the LLP Agreement) can be kept private, unlike the articles of association of a public limited company which must be filed at Companies House.
The Limited Liability Act 2000 governs the taxation of LLPs in the United Kingdom. An LLP registered at Companies House. Although members are obliged to pay tax on all foreign profits in their country of residence, they are not subject to any tax.
Members who are not resident and do not carry on business in the UK are not liable to pay tax.
An LLP is assessed as a partnership in that each individual member is only liable to pay their own income tax on gains made in the UK. Members will only pay their own tax in their country of residence.
A UK LLP must submit an application to HM Revenue and Customs regarding VAT registration if the company earns more than £85,000 from local earnings. VAT registration is compulsory if:
