Government tries to ban LLP corporate members

Plans by the government to crack down on the use of corporate partners by Limited Liability Partnerships (LLPs) is ‘dangerously anti-business’, says the ICAEW

The latest proposal was outlined in a response paper released by the Department of Business, Innovation and Skills (BIS) back in April 2014.

The response relates to a BIS consultation, Transparency and trust: enhancing transparency of UK company ownership and increasing trust in UK business, launched in July 2013.

The proposals, outlined in paragraph 169 of the BIS document, indicate that the government is considering extending the proposal to outlaw corporate directors (where a company director is another company), subject to limited exemptions, to corporate members of LLPs. There was no mention of this idea in the original consultation.

The ICAEW says it is unusual that a response document should contain an invitation to comment, ‘particularly as the original paper is about better transparency’. It is concerned that the current suggestion that corporate partners should not be allowed by LLPs, is ‘dangerously anti-business’ and says that this ‘could have a significant impact both on a number of existing LLPs which have corporate members and also future use of LLPs’.

The ICAEW says that BIS is proposing the change from a business law perspective, but it points out that many LLPs have already restructured to ensure they do not fall foul of the new profit sharing rules set out in Finance Bill 2014 to clamp down on tax avoidance.

The ICAEW is preparing its response to the government’s proposal and is asking for explanations or examples of how corporate members are currently legitimately used in LLPs. Feedback should be sent to by 9 June 2014.

More details are available at


Diane Tan |Content manager - current awareness, CCH

Diane Tan is content manager, current awareness at CCH, Wolters Kluwer UK

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