We have a client who has set up an LLP for sharing the ownership of a yacht. There is no income for this business and the expenses are shared between the owners. This is obviously not a business but should he have set up an LLP?
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Well. it is a better structure than a Ltd company (No BIK) and it ringfences liabilities from the individual owners, it is pretty flexible re changes in ownership so seems fine.
Not sure an LLP has to trade/have a business.
Not sure an LLP has to trade/have a business.
Not trading was where some of the Film Schemes fell down in availability of loss relief when tested at tribunal as I recall, so might be an issue
Well there is that condition in ITTOIA s863(1). I agree that you can have an LLP that doesn't have a trade or business, but it won't be taxed as a partnership. Being a body corporate, it falls back into CT. Here we don't much care about the taxation of the profitless LLP itself; my question/challenge is, what about the members? You say no BIKs. Maybe that's right, I'm not sure. They are at the least participators though? They are (or would be) interested in the income of the LLP (if there was any). And they are using its asset.Not sure an LLP has to trade/have a business.
It might be nice if it was all tax neutral. But is it?
Per section 2(1)(a) LLP Act 2000, an LLP cannot be formed in the 1st place unless there is an intention to carry on a business for profit. I think this has been mentioned here before. See:
http://www.legislation.gov.uk/ukpga/2000/12/section/2
https://www.taxation.co.uk/Articles/2012/05/09/39141/llp-premises