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Closing an LLP

Tax implications?

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I have one LLP client. Two partners (husband and wife). It has been trading for about 5 years (charters a boat which is its only asset, which the partners introduced into the partnership at MV when it started trading). Very small annual profits (circa £10K) which have always been covered by the Capital Allowances on the boat (restricted claims each year). The partners have had enough and so have ceased trading and are looking at informally winding the company up and withdrawing the boat back to personal ownership. 

I know that once trading has ceased or the LLP has gone into liquidation then it will be treated as a corporate body for tax purposes, except where it is being informally wound up and it is not for tax avoidance, etc., and the winding up does not take long (which will seem to apply here).

Am assuming it's the usual straightforward procedure to informally strike off?

For Capital Allowances, am assuming the usual rules apply insofar as the boat will be taken out at MV and so there will be a balancing allowance/charge according to the tax WDV brought forward. Is this correct, (i.e. are there any different rules for LLPs)?

From a compliance point of view, the LLP will be struck off before the end of the tax year. How will it submit its 2021/22 Tax Return if it no longer exists?

Thanks for any pointers.

Replies (4)

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By Paul Crowley
15th Sep 2021 16:14

The partnership will still exist on the self assessment system.
Tax and compliance is down to the partners.

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By Software Seeker
15th Sep 2021 19:21

Ah yes, thanks, of course.

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paddle steamer
By DJKL
16th Sep 2021 00:08

One point though not what you asked, are there any vat issues pertaining to the boat/business that need considered/planned? (I once had a steam yacht disposal where the location of the handover (where in the Med) apparently had a bearing on the vat re the sale (we took outside professional advice), but it was a fair few years ago now (earylish 2000s)

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By Software Seeker
16th Sep 2021 10:05

Thanks for highlighting. The LLP is not/has not been registered for VAT (turnover always below the limits), nor is the yacht being sold (being taken out to personal). Had assumed no VAT implications. Will look into. thanks again.

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