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United Kingdom LLP

The most recent form of legal entity in the UK is known as a British limited liability partnership ("LLP") this is an ideal solution particularly for foreign businessmen and traders who wish to enjoy the benefits of either low or zero-taxation combined with UK incorporation. The primary feature of a UK LLP is that it combines the organizational flexibility and tax status of a partnership (i.e. UK LLP members are supposed to be taxed in the country of their residence) with limited liability for its members. This limited liability is possible because an LLP is a legal entity separated from its members in the same way as an LLC in the USA.

Advantages and Disadvantages of LLP Partnerships

The limited liability is the key advantage of LLP Partnerships. Another advantage is the management flexibility inherent in partnerships. LLP Partnerships, however, suffer from a few shortcomings. The mandatory disclosure of financial information is a drawback; particularly for accountants and legal practices, which have traditionally avoided  disclosing their earnings – with good reason in our opinion! The untried structure of LLP Partnerships also reduces their attractiveness in the short-term although many large law firms are looking to make the switch. Overall, however, the advantages far outweigh the disadvantages.

One important consideration is that a UK LLP must start trading within a year of its incorporation; otherwise it will be struck off by Companies House.

In relation to tax a UK LLP is very similar to a partnership: it is tax transparent or often termed pass-through, this means that it pays no UK tax itself but its members do in relation to the income the derive from the LLP.

A point of interest to many US clients is that the UK LLP is quite similar in many ways to a US limited liability company (LLC)  in a location such as Delaware although it differs by the fact that the LLC has a legal existence independent of its members although it is not technically a corporate entity. A UK limited liability partnership is classified as a corporate enitity with a continuing legal existence independent of its members, meaning that it's existence is not dependent upon its membership.

Members (partners)
A UK LLP can have at least two or more members (or partners) with equal responsibilities. The profit of an LLP is divided between the partners in the proportion of their participation in the LLP.

Details of all UK LLP members must be recorded with the Companies House and are available to the public as with all UK corporate entities, in this area the UK LLP differs from the Delaware LLC where members names are not in the public domain.

A UK LLP must have at least two, formally appointed, Designated members or partners. Designated members have the same rights and duties towards the LLP as any other member. However, they are responsible to perform specific rights and duties such as signing the Accounts, filing any changes at Companies House and signing the LLP’s Annual return.

The Membership Agreement

The members of the LLP must draw up an Agreement. This is the main document that declares the LLP’s structure, corporate activities, the rights and duties of members, the percentage interest of each member etc. If a corporate bank account is opened, this Agreement must be shown to the bank along with the minutes.

The LLP agreement also covers the relationship between the members and the separate corporate entity, which is the LLP. A blank copy of the agreement is supplied at the time of formation which you can complete yourselves or we can complete the document for you if preferred. There is actually no requirement for the LLP agreement to even to be in writing because simple partnership-based rules apply to the LLP but it makes sense to draft the agreement so everyone knows where they stand. It might be that two close friends with an equal 50/50 interest in the partnership could just agree everything with a handshake over a few pint's at the local pub but in our opinion once you move beyond this the agreement is pretty much essential to avoid disputes further down the line.

Formation Fees

Formation of an LLP with provision of Registered Office - £250 
Preparation and consultation regarding the drafting of the LLP Agreement - £95 

ORCA can also apply for a VAT number for your LLP if the company is trading in the UK. A VAT number must be obtained if the company is invoicing more than £70,000 per annum. - £199 

We can provide a number of registered office addresses in the UK. The registered office address provided with the formation is in London but we can supply a wide variety of addresses elsewhere if you also need services such as virtual phone numbers, mail forwarding, call handling etc. See London Maildrop for details.

UK REQUIREMENTS FOR DUE DILIGENCE / KYC PURPOSES - We will require the following two items. You can send us a scan copy to to enable us to get the formation underway but we will require certified copies by post within 14 days and prior to delivery of the company.

1) A certified copy of ONE of the following as Proof of Identity:

The copy must carry a clear photograph, your signature and the number of the document.

Below is an example of the wording of the certification:

"I hereby certify this to be a true copy of the original presented to me and that the photograph bears a true likeness to the individual."

2) Certified copy of ONE of the following (not more than three months old):

Example wording:

"I hereby certify this to be a true copy of the original ……………… in relation to ………………"

CERTIFICATION REQUIREMENTS:

  • The copy must be certified by one of the following: Family GP, Accountant, Civil Servant, Solicitor, Notary, Post Office branch employee or Commissioner for oaths.
  • The person certifying the documents must insert signature, name, position and date, along with their business contact details.
  • The documents sent to us must bear the original signature of the person certifying them; it must not be a copy.

For Non English Speaking Countries:

You should provide us with copy of utility bill/bank statement with the notarised translation into English if the name/address/date in the document is not in English.


UK / Ireland020 7175 0041
(International +44 20 7175 0041)
US / Canada1 954 866 5986
(INTERNATIONAL +1 954 866 5986)
Australia and New Zealand+61 2 9191 7472
(INTERNATIONAL +61 2 9191 7472)
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