Limited Liability Partnership Services
Limited Liability Partnership Services
At Jonathan Lea Network, we support businesses across the UK with all aspects of Limited Liability Partnerships (LLPs). Whether you are exploring the idea of forming an LLP for the first time, seeking to restructure an existing business, or navigating complex disputes between members, our corporate lawyers have the experience and insight to guide you every step of the way.
We provide end-to-end support for SMEs, professional service firms, property businesses and joint ventures, ensuring that the LLP structure delivers the right combination of flexibility, protection, and tax efficiency for your enterprise. Our team is known for combining technical expertise with an approachable, commercially focused style, which sets us apart from many traditional law firms.
What is a Limited Liability Partnership (LLP)?
A Limited Liability Partnership (LLP) is a unique business structure governed by the Limited Liability Partnerships Act 2000. It blends the features of traditional partnerships with the security of limited liability enjoyed by limited companies.
Core features of an LLP include:
- Separate legal personality: An LLP exists independently from its members. It can own property, enter into contracts, borrow money, and take legal action in its own name. This separation protects members’ personal assets from business debts or liabilities.
- Limited liability: Each member’s liability is generally limited to the capital they have invested or agreed to contribute to the LLP. This reduces the financial risk compared to general partnerships.
- Flexible management: Members can choose how to manage the LLP, make decisions, and share profits. This flexibility makes LLPs attractive to a wide range of business types.
- Tax transparency: LLPs are tax-efficient because they are treated like traditional partnerships for tax purposes. The LLP itself is not taxed on profits; instead, each member is taxed individually on their share of the profits.
Why LLPs are Popular
LLPs are particularly well-suited to professional services and collaborative ventures. They allow members to maintain the sense of shared ownership that is characteristic of partnerships, while also protecting their personal assets.
Typical businesses that benefit from forming an LLP include:
- Law firms, accountancy firms, and IFAs: LLPs allow professional firms to balance liability protection with the collaborative culture of partnerships.
- Property investment businesses: Investors and developers appreciate the flexibility in profit allocation and the ability to introduce and remove members easily.
- Joint ventures: Where two or more parties collaborate on a project, an LLP provides a clear framework for contributions, decision-making, and exit strategies.
- SMEs seeking external investment: LLPs can accommodate different classes of membership, making it easier to bring in investors without disrupting operational control.
Our corporate lawyers will take the time to analyse your business model and advise whether an LLP or another structure (such as a limited company) is most appropriate.
Our LLP Legal Services
Jonathan Lea Network offers a full suite of LLP services, covering the entire life cycle of your business. From the initial decision-making process through to ongoing compliance and eventual exits, we are here to guide and protect you.
- LLP Formation and Registration
Starting an LLP involves several crucial steps. We can manage the entire process for you, ensuring that the LLP is correctly structured from day one.
Our services include:
- Advising on whether an LLP is the most suitable structure for your goals.
- Checking the availability of your chosen business name and registering the LLP with Companies House.
- Advising on designated members and their statutory responsibilities.
- Drafting and finalising the LLP agreement (also known as the membership agreement).
Why the LLP agreement is essential: Without a bespoke LLP agreement, your business will be governed by default provisions under the LLP Act, which often lead to unwanted consequences. For example, profits would automatically be split equally among members, regardless of contribution.
- Drafting and Reviewing LLP Agreements
The LLP agreement is the backbone of your business. It governs how the LLP is managed, how profits are distributed, and what happens when members join, leave, or fall into dispute.
We draft bespoke agreements tailored to your business, covering:
- Capital contributions: Defining how much each member must invest and under what terms.
- Profit-sharing arrangements: Allowing flexibility to reward different contributions fairly.
- Decision-making procedures: Establishing voting rights, reserved matters, and management committees to prevent deadlock.
- Exit provisions: Setting clear terms for retirement, death, expulsion, or voluntary withdrawal of members.
- Restrictive covenants: Preventing departing members from competing against the LLP.
- Dispute resolution mechanisms: Avoiding protracted litigation by building in mediation or arbitration processes.
We can also review existing LLP agreements to ensure they remain fit for purpose as your business grows and evolves.
- Membership Changes and Capital Adjustments
It is common for the composition of an LLP to change over time. We assist with:
- Admitting new members: Drafting deeds of adherence and updating the LLP agreement.
- Removing or retiring members: Ensuring financial entitlements are properly settled and restrictive covenants are enforceable.
- Varying capital contributions or profit shares: Keeping your agreement aligned with the commercial realities of the business.
- Resolving disputes between members: Protecting the business while seeking swift, amicable outcomes.
- Corporate Transactions Involving LLPs
We regularly act for LLPs in major corporate transactions, including:
- Mergers and acquisitions: Structuring the transaction, undertaking due diligence, and drafting all required documents.
- Conversions: Advising on converting an existing partnership or company into an LLP, or converting an LLP into a limited company.
- Sales and purchases of LLP interests: Assisting with valuation, negotiation, and transfer documentation.
- Restructuring and demergers: Helping you reorganise the LLP to support growth or new investment.
- Ongoing Governance and Compliance
Once the LLP is established, there are ongoing obligations that must be met to remain compliant. We provide practical support with:
- Advising designated members on their legal duties and liabilities.
- Periodic reviews of governance structures to ensure best practice.
Why Choose Jonathan Lea Network?
At Jonathan Lea Network, we are passionate about helping businesses thrive. We differentiate ourselves through:
- Depth of experience: Our lawyers have acted for LLPs across multiple industries, from small start-ups to major professional firms.
- Bespoke solutions: We do not use generic templates. Every LLP agreement and transaction is tailored to your business objectives.
- Transparent fees: We provide clear cost estimates and offer fixed-fee packages for many common LLP services.
- Commercial awareness: We understand the pressures of running a business and offer pragmatic, actionable advice.
- Collaborative approach: We work closely with your accountants, tax advisers, and other professionals to deliver a seamless service.
If you are considering forming an LLP or need expert advice on managing an existing one, contact us today.
Call +44 (0)1444 708 640 or email wewillhelp@jonathanlea.net to arrange a free initial consultation.
We will guide you through the entire process with clarity and confidence, helping you achieve your business goals while minimising risk.
FAQs: Limited Liability Partnerships
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1. Is it possible for an LLP to be entirely composed of corporate members rather than individuals?
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Yes, there is no requirement for any individual to be a member. LLPs can be structured entirely with corporate members. This arrangement is sometimes used in international structures for tax planning or to consolidate liability within a corporate group. However, HMRC may scrutinise such arrangements to ensure they are not purely artificial for tax avoidance purposes, so legal and tax advice is crucial.
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2. What mechanisms are available for resolving deadlock situations in an LLP?
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Deadlock provisions are often overlooked yet critical. Advanced LLP agreements may include escalation clauses requiring structured negotiation, mediation, or independent expert determination. Other sophisticated mechanisms include Russian roulette, Texas shoot-out, or put-and-call options, which provide clear exit strategies when members cannot agree. Without such provisions, deadlocks can paralyse the LLP and lead to expensive litigation.
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3. Are there tax anti-avoidance rules specific to LLPs that members should be aware of?
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Yes. The UK has implemented specific anti-avoidance provisions under the Salaried Members Rules (FA 2014). If an LLP member is effectively in an employment-like role (i.e., lacks significant capital contribution, profit is not linked to the LLP’s performance, and they do not have substantial management influence), HMRC can treat them as an employee for tax purposes. This can create unexpected PAYE and NIC obligations for the LLP. Sophisticated LLP agreements must be drafted carefully to avoid inadvertently triggering these provisions.
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4. Can an LLP restructure into a limited company, and what complexities arise?
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An LLP can be converted into a limited company, but the process is more complex than simply incorporating a new entity. It usually involves a transfer of the LLP’s assets and liabilities under section 1003 of the Companies Act 2006 or a business transfer agreement. Tax considerations are significant, as capital gains tax and stamp duty land tax may be triggered. Advance clearance from HMRC can sometimes mitigate these risks, but careful planning is required.
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5. What happens to intangible assets such as intellectual property when members leave an LLP?
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Unless otherwise specified in the LLP agreement, IP created by members may not automatically vest in the LLP. Departing members could potentially assert ownership rights, leading to costly disputes. A robust LLP agreement should clearly state that any IP developed by members during their tenure vests with the LLP and include restrictive covenants to prevent the use of such assets after departure.
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6. Can an LLP create different economic rights for different classes of members?
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Yes, LLPs offer flexibility similar to companies with share classes. You can create different membership classes, each with bespoke profit-sharing entitlements, voting rights, and capital return priorities. This is particularly useful when bringing in passive investors or rewarding key individuals with enhanced profit shares. Such arrangements must be precisely documented to avoid ambiguity and tax complications.
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7. Are LLP accounts required to show the breakdown of each member’s profit share?
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While LLPs must file accounts publicly at Companies House, detailed disclosures about individual members’ profit shares are not required. Only aggregate figures are published. This can offer more privacy than limited companies, where directors’ remuneration is often more visible. However, members’ names and certain particulars remain part of the public record.
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