United Kingdom LLP | LP | LTD

Limited Liability Partnership (LLP) is a partnership that has at least two partners who can be legal entities or individuals of any nationality.  

There is possibility to use as partners the two nominal offshore companies which are not tax residents of the UK.

There are no requirements to an authorized capital of the company.

Information about the partners of the LLP is available to third parties in the public register of companies.


Scottish Limited Partnership (LP) is similar in structure to LLP.

A company doesn’t pay income tax if the participants are non-residents of the UK. The company doesn’t have a resident status as the company doesn’t pay taxes in the UK. However, the company may carry on business freely outside the UK.


Private Limited Company (LTD) – the limited liability company in the UK.

The minimum number of directors and shareholders is one director and one shareholder who can be both individual person and legal entity, resident or non-resident.

There are no requirements to an authorized capital of the company.

Information about shareholders and directors is publicly available.


Taxation.

In distinction from offshore companies, United Kingdom has a normal (medium or high) tax rates on income of companies and individuals. For this reason before registration of a company in the UK, it is important to take into account the following features:

  • Corporation tax rate – 20% (from April 1, 2015);
  • Standard rate of VAT – 20%;
  • The maximum rate on individual income tax – 45%;
  • A resident of the United Kingdom is considered a company which is registered in the UK or a company whose the central management and control are in the UK;
  • Worldwide income (which are received both inside the UK and outside of it) of residents companies are subject to corporate tax with the possibility of foreign tax credit;
  • Non-resident companies are subject tax in respect of received income from sources in the UK.


Provision of accounting reports.

Company registration in the UK involves responsibility of such company to keep accounting, submit financial statements, tax returns and annual data confirmation to the Register of Companies. Also the English companies LTD and LLP are required to submit data on the ultimate beneficiaries from July 1, 2016. The companies which are VAT taxpayers should submit a separate VAT returns:

  • Annual report provides information about the legal address, the structure and governing bodies of the company. Since 2016 year this report was replaced by a simple confirmation statement about the completeness and accuracy of the information which the company provided to the Register of Companies in accordance with legislative requirements.
  • Annual financial statements includes information about the financial activities of the company. The first report must be submitted for 9 months after the end of accounting business period. Late submission of reports implies the charging the penalties. Often companies which don’t carry on activities, submit "sleeper report" (that is compiled on the basis of the declaration of the beneficiary on a special form).
  • Tax return. The companies are responsible for the tax charges and payment of taxes. Tax returns must be submitted for 12 months after the end of the tax period. All tax returns are submitted online.


Performance of an audit.

Audit of financial statements is not required for most small private companies (except where such a requirement was established by the company in the Article of Incorporation).

The company is exempted from audit if not less than two of the following three criteria fit:

  • Annual turnover not more than £ 6 500 000.
  • Balance sheet assets doesn't exceed £ 3 260 000.
  • Average number of employees is 50 or less.


Advantages and Disadvantages of English LLP | LP


Advantages:

  • High international prestige of this jurisdiction;
  • There isn’t corporate (income) tax for LLP company;
  • LP company doesn't pay income tax if the participants are non-residents of the UK;
  • LLP may be used for international trade, service provision, asset protection, as an investment companies.


Disadvantages:

  • It's required to prepare and submit annually financial statements;
  • Each partner has to be registered and obtain tax registration number in the UK;
  • If the company operates outside the UK, there is no possibility to get a VAT number.

Advantages and Disadvantages of English LTD


Advantages:

  • High international prestige of this jurisdiction;
  • LTD may be used as a holding company, for international trade, as an intermediary company.


Disadvantages:

  • Profits tax rate from 20%;
  • It's required to prepare and submit annually financial statements;
  • If the company operates outside the UK, there is no possibility to get a VAT number.