UK Offshore Registration — Limited Liability Partnership (LLP)

Short and simple about LLP, its advantages, owners, shareholders and necessary documents. 

What is it? 

Limited Liability Partnership (LLP) – a type of economic organization created by agreement of legal or physical persons by combining their contributions in cash or in the form of money. A UK Limited Liability Partnership (LLP) is not treated as a separate taxable entity in the UK and there is no liability to corporation tax.

Historically, the partnership structure has been the vehicle of choice for ‘people’s enterprises’ such as accountancy and law firms, many of which have been operating as partnerships for over a century. Prior to 2000, these businesses would have operated as general partnerships or limited partnerships. Limited Liability Partnerships (“LLPs”) have existed in the UK since 2000 and are becoming increasingly popular. They are widely used in various sectors such as insurance brokers and architects.

Like a limited company, an LLP is a legal entity that has a separate legal status and is governed by the provisions of the LimitedLiabilityPartnershipsAct2000 and the Companies Act 2006. It is therefore an alternative to a simple company limited by shares.

A special feature of partnerships is that the LLP itself is not a taxpayer, but its members (partners) are liable to tax on the income derived from their involvement with the partnership. However, if the partner is not resident in the UK and the partnership carries on activities outside the country of incorporation, its income is not taxable in the UK.

Members of LLP 

A member of the LLP can be any person or entity, or any other LLP, and there is no limit on the number of members of the LLP. Members are those who set up the LLP and those who have subsequently joined with the consent of existing members. The partnership in an LLP ends on the retirement or death of the member concerned, the dissolution of the LLP, or by agreement of the members. The Act and Regulations introduce a separate class of members called ‘appointed’ members, who are appointed on registration or by agreement between members. Appointed members are responsible for ensuring that the LLP complies with the procedural and administrative requirements set out in the Act and the Regulations, and can be matched by company secretaries. If fewer than two appointed members are appointed, each member will be deemed to be an appointed member.

Requirements for the institution

There must be at least two partners (designated members), one of whom is designated as the managing partner. The partner is a natural person or a legal entity; there are no residency requirements.

Partners may be nominees. Shareholder, director and beneficiary must provide photo identification and proof of domicile. Legal entities provide documents proving their incorporation and structure.

The share capital represents the partners’ contribution, which is distributed between the partners and is not paid at the time of registration. The partnership must have its registered office in England.

Documents required to open a partnership 

If the partner is a legal entity, an extract from the register of the country of registration, registration documents of the legal entity and documents confirming its structure will be required. Individuals, including the beneficiary, are required to have a copy of their passport and proof of domicile, as well as a questionnaire in which the client states his wishes regarding the structure of the company. As proof of domicile, nationals of another country may provide a copy of their internal national passport or a recent utility bill showing their name and address.

Taxation

An LLP is not subject to UK corporation tax. If the partnership has overseas participants and the company does not carry on activities in the UK, there is no taxation in the UK and the participants must meet their own tax obligations in the country of incorporation. If the partners are offshore companies, they are exempt from tax if they do not carry on activities in the territory where they are incorporated.  In order to receive the VAT number, it is necessary to document that the taxable turnover of the company has exceeded or will soon exceed the registration threshold (in 2017 it was £85,000). When registering VAT voluntarily, the registration authority requests additional information – the type of business, the contact details of the company and the business partners in Europe.

Every VAT-registered company must file quarterly reports with the UK tax authorities – HMRC. Value Added Tax (VAT) is levied in Britain at a rate of 20%. When trading with partners from EC countries who also have a VAT number, a tax rate of 0% applies. It is possible to obtain EORI (Economic Operator Registration and Identification), a unique identification number given to traders engaged in foreign trade upon registration in the Entrepreneur Registration and Identification System. It is used to identify traders and other persons when contacting customs offices.

Registration

When a new company is registered in England and Wales or Scotland, it must register with Companies House, the executive agency of the Department for Business, Energy and Industrial Strategy. Irish nationals have been registering there since 2009. 

By investing in British companies, you are investing in a completely legal business, which will not intersect in any way with the offshore. So why is it worth registering a company in the UK? It’s very simple, you get a lot of advantages: 

  • Prestige. Without a doubt, a British company is the most respected and respectable in the world.
  • Stability. Economic and political stability, protection of the business by the government.
  • The opening of the company in 24 hours.
  • The director and the shareholder can be a citizen of any country, his presence in the country is not obligatory.
  • Low tax and only one.
  • The property of the company is protected by the state of Great Britain.
  • The possibility of business immigration.

Benefits

Trading through an LLP brings numerous benefits –

  • Limited liability protects a member’s personal property from the liabilities of the business. 
  • The partnership’s activities and profit sharing are determined by a written agreement between the members.The partnership’s activities and profit sharing are determined by a written agreement between the members. This can provide greater flexibility in managing the business.
  • An LLP is considered a legal entity.It can buy, lease, rent, own property, employ staff, and enter into contracts.
  •  An LLP can designate two companies as members of an LLP. 
  • Partnership name protection. That is, when you formalise a business the other branch that is in control of that business cannot take the same name as you.

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