LLPs in a nutshell

Those are key TAX differences

I wrote a piece introducing key elements of LLPs a while back - having previously advised on many of them when I was in practice.  Link here.

I think some accountants have held off advising on LLPs as to do so requires payment for additional modules for their accounts preparation software. I also think that some clients who are advised to incorporate soley to secure the protection of limited liability over the last few years might have been better off operating as LLPs.

Mark

Tax transparency

is the key thing.

On the software point, you can customise VT Final accounts to do just about anything, so that seems to me to be a sensible work around. HMRC still cannot cope with LLPs and likewise Companies House, so you have to file on paper.

Decide which type of partnership is suitable - LLPs are good, but you never know a Limited Partnership might tick the right boxes in the right circumstances, other than that you have the general partnership. So, there are three different choices there.

For tax: we have had a lot of anti-avoidance provisions in the last few years and in many ways HMRC has been slow to move on updating its guidance in many areas. The key areas to be mindful of are, (in no particular order):

The treatment of losses;

Income shifting, the settlement provisions, where you have spouses as partners;

Capital allowances, especially where you have corporate partners;

CGT can be something of a headache when you have joiners and leavers and you have parrtnership property or recognise goodwill;

SDLT should not be overlooked, it is particularly complicated for partnerships- again a big issue where you have property or investment partnership;

Investment partnerhsips have their own set of rather special peculiarities for tax.

Then there are other rather interesting angles  such as how you go about holding property on behalf of a partnership, whether partners are partners or employees, whether, in fact a partnership exists, what you want to do about capital contributions, profit shares, IHT planning: whether a partnership is a viable altnerative to a trust, and last (but by no means least) whether it is worth having a dual structure of partnership and company...