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Trading through an LLP and Small Ltd Co

I have recently acquired a client from a 5 partner firm.

The work done is outside of IR35

The client (Mr C) has been set up with an LLP and a small close company (Co Ltd) of which he is the sole shareholder and director

The LLP has two partners, my client and Co Ltd

Last year the profit earned by the LLP was shared between the partners in the ratio Mr C £7,475 : Co Ltd £60,000

Co Ltd awarded dividends to Mr C in the sum of £48,000 and paid £12,000 CT

My first reaction is that the whole thing is unnecessarily complicated and to dissolve the LLP and just trade through Co Ltd. The client has no idea why things have been arranged in this way and is generally critical of the advice he has received.It seems to me that the only beneficiary of such an arrangement are the accountants who have two sets of accounts to prepare.

Am I missing something? 


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25th Jul 2012 13:59

And the other beneficiary is ...

.. the client. Who saves a load of national insurance.

But there are some doubts about whether this works if the Ltd Co doesn't have a business in its own right.

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25th Jul 2012 14:07


Big car in LLP with PU% --> Balancing allowance on sale?

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25th Jul 2012 14:20


.. you don't need a corporate partner for the vehicle advantage.

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25th Jul 2012 14:36


... you do need the partnership structure to retain that advantage.

Although this will be the next sort of car arrangement to hit the tribunal following Cooper.

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25th Jul 2012 14:34

But LLP cant pay divis...

@MBK - essentially you have the best of both worlds. Divi remuneration (no NIC) and a porsche 911 expensed with no company car tax.

In addition you dont have problems with other P11d type items, as all relevant expenses go through the LLP with an appropriate PUR.

I would say it was an iminently sensible arrangemnt for the right type of client

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25th Jul 2012 15:30

Cooper Case

@Steve, if I read the Cooper case correctly the facts aren't the same. I think in Cooper the  Partnership and company are in parallel, and the p'ship bills the company for uste of car.I dont think the result could be readily applied to the structure outlined by the OP.  Correct me if I am wrong.  

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25th Jul 2012 15:52

No you're right

The partnership in Cooper was a service partnership to the trading company, as you say.

I was just thinking out loud to a certain extent.  This company/individual partnership structure is about the only combination that hasn't yet hit the tribunal, and HMRC may now be feeling sufficiently heartened by the Cooper decision to "have a go" at this structure.

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26th Jul 2012 15:22

Thanks for the replies

I can see that with the right type of vehicle there can be an advantage in having an LLP to deal with the vehicle and therefore avoid having a BIK and a Ltd Co to distribute the income via dividends so avoiding Cl 4 NIC

In this case the car is very modest and the saving of PAYE/NI would not be greater than the additional costs of having two businesses; 2 accountancy fees, two sets of bank charges, class 2 NIC or payroll costs, etc

I will therefore recommend that the LLP is closed and the Ltd Co is kept.

With kind regards


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