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Undergoing conversion

22 November 2016 / Andrew Constable
Issue: 4577 / Categories: Comment & Analysis

Taxation issues that can arise when a partnership changes to a limited liability partnership.


  • An LLP is a separate legal entity and there is a subtle difference in the tax rules compared with unincorporated partnerships.
  • If the same trade continues through a partnership and then an LLP they are regarded as the same for income tax purposes.
  • A partnership must carry on a business with a view of profit’ but an LLP can be formed for any or no purpose.
  • A member of an LLP can be treated as an employee for tax purposes if specific rules in ITTOIA 2005 are met.
  • VAT and stamp duty land tax issues can also arise on a change of format.

Limited liability partnerships (LLPs) have been around for almost 16 years now. In many cases unincorporated partnerships that wished to convert have already done so...

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