Great Britain always remains on the list of priorities for many business people. This is entirely justified, given the local economy’s high level of development and high business standards. At the same time, it is not easy to enter the local market for two main reasons: the need to strictly comply with various bureaucratic formalities for starting and running a business (including the aspects of forming and filing reports), the need to invest sufficiently big money to start operations in the United Kingdom, especially when it comes to regulated activities (such as financial activities). Nevertheless, the UK legislation offers a flexible tool that allows foreign investors to enter the local market with minimal costs and more efficiently compared to the standard option of establishing a legal entity. This simplified option is the formation of a limited liability partnership, the operation of which, in London or any other city of the United Kingdom, can open access to many benefits for business in this jurisdiction.
Advantages of registering an LLP in the UK
Suppose you want to register a UK company as an LLP. In that case, its practical implementation can open up access to the following advantages of doing business in the region:
- there is no requirement for LLP members to be residents of the UK;
- the ability to operate both in the UK and around the world;
- limited liability of participants;
- the simplicity of the process of registration and conducting activities with a minimum of bureaucratic formalities;
- absence of currency control;
- favorable tax conditions when operating abroad (no taxes).
The main features of limited liability partnerships in the UK
A limited liability partnership is an agreement between 2 or more persons to do business together. Partners can be both individuals and legal entities of any residency. LLP can be established only as a business structure. This form is not suitable for non-profit organizations.
To settle the legal relationship between them, partners should sign a partnership agreement to distribute their rights, responsibilities, and shares in the business. The partnership agreement also specifies the mechanism for the distribution of profits and losses of the LLP. There are no formal requirements for charter capital, but the partners must also spell out in their agreement the amount and manner of the contribution of money to the business by each of them. The partnership agreement also specifies the procedure for withdrawal from the partnership and the entry of new partners. The partners’ liability is always limited to their contributions to the joint venture.
Procedure for establishing a Limited Liability Partnership in the United Kingdom
It is possible to register a company in the UK in the form of an LLP after going through some interrelated steps:
- Formation of a list of activities that the future LLP plans to carry out in the UK.
- Formulating a name for the partnership.
- Collection and execution of all necessary data and documents about future partners.
- Search and registration of an official address for the partnership.
- Drafting and executing the partnership agreement, memorandum of association, protocol, registration, and other documents required for the LLP.
- Payment of necessary registration fees, submitting a set of documents to Companies House for consideration and entering information about the new partnership into the Registry of Companies if the issue is resolved positively.
- Opening a corporate bank account for the partnership.
Legislative regulation of activities and tax aspects for LLP
In its essence, the LLP is analogous to an offshore company. Still, the partnership is designed to do business in countries with a negative attitude towards the offshore model. The UK applies just high requirements in the offshore aspect, so the LLP acts as a suitable alternative for investors from the point of view of local regulators.
If the LLP does not operate in the UK, the partnership will not be considered a UK tax resident – no taxes will be payable in the UK. Partners in an LLP are responsible for paying their taxes on the income from the LLP’s activities. Taxes will be declared and paid per the country’s laws where the partners are residents. It should also be noted that LLPs are not subject to mandatory auditing requirements for their activities, only to file reports on time.
How Prifinance specialists can assist
Suppose there is a request to register a business in the UK as an LLP. In that case, Prifinance lawyers are ready to assist in its practical implementation, including through the following legal services:
- assess the background of the business case and develop a customized registration plan;
- collect and process all necessary data and documents for LLP registration in the UK;
- draw up and execute, following the formal requirements of the law, the constituent and registration documents for the LLP;
- negotiate with all representatives of local authorities and banks;
- assist with legal support for LLP activities in the UK and abroad.
Prifinance lawyers already have more than 11,000 successfully implemented cases in company registration worldwide. The lawyers are ready to apply this experience to launch and run another business project successfully. Provide input for individual advice and suggestions on registering an LLP in your particular case.