LLM6150 - Conversion: Limited Liability Partnerships
Background
Limited Liability Partnerships were introduced by the Limited Liability Partnerships Act 2000. BIM72110 contains more details on LLPs (LLM10000). Tax rules on LLPs are in ICTA88/118ZA onwards, and in ITTOIA05/S863.
Lloyd바카라 사이트™s admitted LLPs as members with effect from 7 December 2005. The first LLP members of Lloyd바카라 사이트™s participated in the 2007 underwriting year.
Tax rules for Lloyd바카라 사이트™s LLPs
SI2006/111 amended the 1997 Regulations on SLPs (SI1997/2681 - see LLM6060) so that they apply to 바카라 사이트˜Lloyd바카라 사이트™s partnerships바카라 사이트™, with effect from 14 February 2006. A Lloyd바카라 사이트™s partnership is a member of Lloyd바카라 사이트™s that is either a SLP or a LLP formed under the Limited Liability Partnerships Act 2000 or the Limited Liability Partnerships (Northern Ireland) Act 2002. The 1997 Regulations were renamed the Lloyd바카라 사이트™s Underwriters (Partnerships) Tax Regulations.
The effect of the 2006 changes is that the Regulations now apply to Lloyd바카라 사이트™s LLPs in the same way that they apply to Lloyd바카라 사이트™s SLPs, with the exception of the treatment of 바카라 사이트˜earned income바카라 사이트™. This in turn means that the normal tax rules that apply to partnerships, subject to the adaptations set out in the Regulations, apply to all Lloyd바카라 사이트™s partnerships.
The conversion relief rules in FA93/SCH20A (LLM6160) were also amended (in SI2006/112) so that they apply to LLPs as well as to SLPs, also with effect from 14 February 2006.
바카라 사이트˜Earned income바카라 사이트™
바카라 사이트˜Under Review바카라 사이트™
Loss relief
The rules which limit loss relief of a limited partnership member to the amount of the member바카라 사이트™s capital contribution (LLM6090) apply similarly to LLP members. There are further restrictions to limit the amount of loss relief for 바카라 사이트˜non-active바카라 사이트™ members of LLPs. However, these further restrictions do not apply to the underwriting business of a Lloyd바카라 사이트™s Name.
The limit on the amount of sideways relief (ITA07/S64 and ITA07/S72) and capital gains relief (ITA07/S71) introduced by FA07/SCH4/PARA1 as ITA07/S103C does not apply to partners in a partnership which is a member of Lloyd바카라 사이트™s - ITA07/S103C (8).
Tax relief for interest on borrowings
ICTA88/S362 (2)(a) denies tax relief to limited partners in SLPs and members of investment LLPs on interest paid on amounts borrowed to buy into the partnership. Limited partners in Lloyd바카라 사이트™s SLPs cannot therefore get tax relief for such interest, but this restriction does not apply to members of Lloyd바카라 사이트™s LLPs, which are trading, not investment, LLPs.