Could someone please explain in laymen terms the benefits of the new LLP that was introduced in the April 2001. What is the difference between an LLP and Ltd Company's for the calculating of tax, also any other benefits.
Mrs K Pointer
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LLPs and VAT
A possible advantage/use of LLP is where the same two individuals have the wish to have two seperate businesses. Provided they are run seperately - different bank accounts, PAYE references, and clearly seperate in all respects - I am advised that aggregation is unlikley (but it has not been put to the test yet so far as I am aware.
Similar question
A similar question was posted on 6 November 2001, entitled "limited liability partnerships" and you may want to check the answers given there.
LLP pays income tax
The basic difference between a LLP and a company is that a company pays corporation tax while a LLP pays income tax. LLP is subject to normal partnership rules.
The only advantage I can think of is to give some protection to partners of big firms of solicitors from going bankrupt. If a LLP goes bankrupt then indivudual partners' private assets are proteced unless fraud is inolved. Same rules apply in respect of directors of limited companies.
The classic case in company law which divides a corporate as a person from its shareholders is: Salamon V Salomon & Co Ltd.