Set Up an LP (Limited Partnership) in the UK

The United Kingdom is an ideal option for asset protection by forming an LP (limited partnership). 

The UK Government fully supports the EU’s requirements for business transparency and strives to comply with these norms in the fight against financial fraud and money laundering. However, it does not diminish in any way the merits of the UK Limited Partnership as one of the most promising and profitable forms of business for ownership of real estate, corporate and personal assets. 

Foreign residents (individuals or legal entities) are welcome as LP partners, and they pay taxes only on the income generated directly in the territory of the British jurisdiction. 

Limited Partnership – What Is It?

LP (Limited Partnership) in the UK is one of the most common forms of business. The minimum number of partners is 2, with one of them being a general partner that has the authority to manage the business.

This type of partnership is still regulated by the Limited Liability Partnerships Act of 1907, which is currently in the process of being amended. 

Applicable Laws, Rights and Obligations of LP in the UK

The following rules will remain applicable to LPs in England until the new amendments to the Partnership Act are adopted and finally take effect:

• Number of partners – at least 2 persons, individuals or legal entities that can be residents of any country
• One partner is appointed a general partner that fully manages the business
• Partners’ liability is limited to their shares
• There are no minimum requirements for the authorized capital
• The registered office can be rented and there are no requirements for an office to be based in the UK
• Tax is only payable on the profits originating in the country of incorporation
• Partner data is protected and is not shared with the registrar
• Accounting in England is not provided for limited partnerships, but keeping business records is a must

However, amendments are on their way, and they are expected to fundamentally change the LP rules in England, Wales, and Northern Ireland. The new rules will be somewhat similar to the established norms for partnerships in Scotland. 

New 2022 LP Act in the UK

What reform is the UK government proposing in the fight against money laundering and tax evasion in 2022? According to the submitted document, the new Law on Partnerships will be applied as soon as possible in the updated version.

Limited Partnership (LP) in England will be expected to comply with the following legal rules:

• LP may be formed prior to registration with Companies House.
• The presence of a registered office and postal address will be a mandatory requirement for limited partnerships.
• A restriction on general partners: a general partner will not be appointed by a person previously removed from office as a director of a British company. Also, the general partner of an LP (legal entity) must appoint an individual as a registered official and provide a “personal individual contact” for each of its officials with the status of a legal entity.
• Partner data is shared with Companies House.
• LPs will be required to annually confirm their presence through a statement to the Companies House (as other companies are supposed to do at present).
• The circumstances in which HM Revenue & Customs (HMRC) may require an LP to provide reports will be developed by the government. 

The new rules will apply to the existing and newly established UK partnerships.

The transitional period for old LPs is 6 months from the date on which the amendments enter into force. If the partnership fails to transmit the information to the registrar, it will be automatically deregistered at the end of the transition period.

A newly formed UK Limited Partnership is expected to file its data within 1 year from the date of establishment.

UK LP Features

LP as a legal form is very common in international practice, including in the UK. The features of LPs in the UK include the following characteristics:

1. Quick online formation.
2. Limited partnerships can carry out all legitimate business activities, including trade and services provision.
3. LP is not a legal entity, but it has a number of characteristics typical of an ordinary enterprise: a unique name, registration number, mailing address for correspondence, and an office (that can be rented later on). 
4. Affordable cost of set-up and further business financing.
5. There are no restrictions on the number of partners or their residency status.
6. No taxation in the UK territory if the profits come from foreign sources and the partners have no tax liabilities in England.
7. Extensive opportunities to do business in the EU and other states.
8. The real possibility of obtaining VAT and EORI. The second one can be assigned if there is a real office in the country or if you open an account with a local bank. To obtain a VAT number, you need to confirm that the firm’s cash turnover exceeds £85,000.

The Cost of LP Formation in the UK

The cost of the limited partnership set-up procedure in England with the support of our portal experts depends on the range of services and starts from 2,000 euros. The minimum package that a foreign founder may order includes:

• checking the partnership name for uniqueness
• preparation of required documents and forms
• submission of documents to Companies House
• LP postal address
• accountant’s services

We also provide additional corporate services whose price depends on many factors (to be discussed individually with each of the UK limited partnership founders):

• opening a personal or corporate bank account in the UK and abroad
• translation and apostilling of documents
• nominee service (if it is acceptable)
• rental of an office in Britain
• annual reporting on the results of the tax period in the UK
• free consulting at all stages of the transaction

How to Form an LP in the UK

Formation of an English limited partnership in England does not take too long. For many years, the United Kingdom has had a practice of remote opening and servicing companies. You can register a business within a few days on the condition that you provide a complete set of documents that meet certain requirements.

In fact, an entity is formed by submitting registration forms to the Register of Companies — Companies House. Registration is done remotely, so your personal presence is not required.

A tax-free LP in the UK is set up as follows:

1. Checking the partnership name to ensure it is unique
2. Verification of documents submitted by the applicant
3. Fee payment
4. Registration of the partnership in the Register
5. Preparation of original corporate documents and their notarized copies

At the same time, keep in mind that you will need to open a bank account for personal and corporate purposes. When you set up a partnership as a non-resident in the UK, it is better to open accounts in protected offshore zones and safe states. 

A foreign partner in the UK that receives financial services automatically becomes a tax resident of the country and will be required to pay income taxes on the profits charged to his personal account in the amount of more than £2,000 per year.

Documents for LP Formation in the UK

If you decide to form a limited partnership in the UK, you will have to provide our specialists with the following documents:

Individuals:

• Application form
• Several variations of the partnership name
• Documents for partners and beneficiary 
• Confirmation of the actual place of residence (address).
• Information about the type of activity and approximate geography of business

Legal entities will have to prepare the following documents:

1. A completed application form
2. A copy of the Certificate of Incorporation
3. Articles of Association and Memorandum of Association (copies)
4. A letter with information about the entity management (if this list differs from the one fixed in the Articles of Association)
5. Information about the official (individual) who will represent the Partnership’s parent company in England to be transferred to the Registrar of Companies (a new condition that will apply after the adoption of the Partnership reform in England)

Please contact our portal experts at info@offshore-pro.info to get up-to-date information on UK Limited Partnership formation requirements.