A Limited Liability Partnership (LLP) is a relatively new legal entity that came into existence in April 2001. The characteristic of an LLP is that it has the organisational flexibility of a partnership, but in many other respects is very similar to a private limited company. Furthermore, an LLP is outside the scope of corporation tax and is taxed on the same basis as a partnership. This is an overview of the initial compliance requirements for an LLP and deals with both pre-incorporation matters and post incorporation issues. If you have any specific issues which are not answered by this material please feel free to contact our office for advice.
In parallel with the requirements emposed on private companies, the registered office of an LLP will be where the Registrar sends all letters and reminders.The registered office must be the same country that your LLP is registered with (e.g. an LLP registered in Scotland must have a registered address in Scotland) and must be an effective address for the delivery of documents. Companies House will check the proposed registered office address from the Post Office records. P.O. Box numbers are not permitted. A change of registered office post incorporation can be notified to Companies House on Form LLP287.
Members and designated members
An LLP can have two types of members. Designated members have additional responsibilities, and in particular are responsible for:
- Registering the LLP for Self Assessment with HMRC
- Registering the LLP for VAT if you expext your business's sales to be more than £81,000 a year
- Appointing an auditor (if one is needed)
- Signing the accounts on behalf of the members
- Preparing, singning and sending annual accounts to the Companies House
- Delivering the accounts to the Registrar
- Keeping Companies House notified of the registered office address and any changes thereof
- Preparing, signing and delivering the Annual Return
- Acting on behalf of the LLP in the event of winding up or dissolution
The designated members are legally accountable for these responsibilities A member may become a designated member at any time with the agreement of the other members. The rights and duties of all members (whether designated or not) towards the LLP are the same.
Restrictions on choice of LLP name
All limited liability partnerships must end with the words "Limited Liability Partnership" or their abbreviations or Welsh equivalents (Partneriaeth Atebolrwydd Cyfyngedig). Otherwise the rules for choice of name are similar to that of companies, meaning that the name may not be identical or "too close" to a name already on the Register. As LLP names are compared against existing company names, the name cannot be the same as or "too like" any existing company name.
Moreover, there are general restrictions on certain types of names such as:
- restrictions on the use of certain words in the name and names that could imply a connection with a government department or public body
- inappropriate and misleading use of a name ending, e.g. “limited” at the end of the name. If the LLP is trading there are rules to prevent the use of names that could mislead the public
Publication of an LLP name
The requirements for publication of the LLP name are very similar to those for a private company. The LLP name must be painted or affixed in a conspicuous or legible manner outside every place of business in the UK.
The LLP must also state its name, legibly, on the following:
- All business letters
- All notices and other official publications
- All bills of exchange, promissory notes, endorsements, cheques and other orders for money or goods signed by, or on behalf of, the LLP
- All invoices and letters of credit
In addition, all business letters and order forms must show in legible lettering:
- The place of registration and the registered number
- The fact that the business is an LLP
- The address of the registered office
Annual returns and accounts
The first accounts of an LLP must be delivered within 10 months of the accounting reference period. If that period is more than 12 months, within 22 months of the date of incorporation, or three months from the end of the accounting reference period, whichever is the longer. The accounting reference date defaults to the end of the month following the anniversary of incorporation unless Form LLP225 is filed altering the accounting period. The Annual Return must be filed every 12 months. A shuttle return is normally provided and the return must be filed within 28 days of the date to which it is made up.