Limited Partnership Law crackdown continues

The last few years have seen a crackdown by the UK Government to tackle the abuse of companies and partnerships as a means to hide crimes, money laundering and tax evasion.

Limited Partnerships are a type of hybrid business which have at least one general partner who has unlimited liability and a number of limited partners who do not usually get actively involved with the day to day management of the business and who enjoy limited liability status. They are most commonly used as an investment vehicle.

Although many are set up with a legitimate business purpose, investigations by the Government have shown “evidence of a disproportionately high volume of suspected criminal activity”. The Government’s concern was that many of those Limited Partnerships created in Scotland, in particular, were being used as a means to take advantage of the lack of transparency and reporting requirements.

The current law which governs Limited Partnerships is the Limited Partnership Act 1907 and has had very few amendments since its implementation. Arguably, it has been overdue an update for quite some time.

The Government is now considering a full reform of the law and has started the consultation process. Some of the changes which the Government is considering includes:

• A reform that requires all presenters (those seeking to register a Limited Partnership) to be registered with an anti-money laundering supervisory body;
• As with limited companies, for all Limited Partnerships to either have a registered office in the UK or a service address in the UK;
• For all Limited Partnerships to complete an annual confirmation statement as limited companies also have to file annually with Companies House; and
• To give Companies House the power to strike Limited Partnerships off the registrar of companies, which currently only has to power to strike off limited companies.

Any reforms will clearly place more emphasis on reporting and transparency. However, the specifics are yet to be agreed.

For further information on the consultation please visit the gov.uk website. 

MORE INFORMATION 

If you require any further information on your Limited Partnership or any other type of company formation, we can assist. Please contact our Corporate Law Department for more information – call us or email by using the form to the right.The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of May 2018.​