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A limited liability partnership (LLP) consists of the taxpayer and a limited company. The company has taken the largest profit share but this is undrawn, while the taxpayer has an overdrawn account
For several years a client has operated as a limited liability partnership (LLP) with himself and a limited company he owns as the two members.
As has often happened in such partnerships the company has taken the largest share of the profit but has not drawn any of it. In the meantime the individual has substantially overdrawn his partnership current account.
As a result although the total net balance on the partnership current accounts is nil this comprises a £170 000 balance owed to the company and a corresponding balance overdrawn by the individual.
With the new changes to partnerships it seems that the trade should be incorporated but I am not sure whether it is best to do this into the existing company or into a NewCo.
Query 18 383 – Newbie
