The government department, Business Innovation & Skills (BIS) has published a response to a consultation document relating to greater transparency and trust in UK business and included a proposal to prohibit corporate membership of LLPs.

The response document 'Transparency & Trust: Enhancing the Transparency of UK Company Ownership and Increasing Trust in UK Business' contained the anticipated proposal that Limited Liability Partnerships (LLPs) should be subject to a new regime disclosing beneficial owners. It also sets out a policy for default prohibition of corporate directors (subject to limited exemptions) and goes on to state, 'we see a case for consistency and the inclusion of LLPs in this system alongside companies'. This would have the effect of banning the use of limited companies as corporate LLP members and proposing the removal of existing companies in this capacity.

Initial indications suggest that the timescale to become compliant is likely to be within a one year period.

Given the recent changes to the LLP tax regime and the business restructuring that was required by businesses using this type of structure, this is likely to have further significant impact on both existing and future business looking to use an LLP structure. Unusually for a response document, further views are sought on this point, and no doubt the professional bodies will be seeking member's views to respond accordingly.

 

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