Limited Liability Partnerships : Life of a Limited Liability Partnership

There are formalities to maintain, so that a Limited Liability Partnership once registered stays on the registrar’s list. We have tried to summarize the obligations of a Limited Liability Partnership towards the Companies House. If you’re in any way connected to a Limited Liability Partnership firm in the United Kingdom, you will want to go through this document. The designated members of a Limited Liability Partnership firm are personally responsible and bound by law to submit the annual reports, returns, and accounts to the Companies House. Failing which, they can be prosecuted by a court of law. Also, there are civil penalties for late submissions. It is only by fulfilling these annual duties that you can avoid any actions against your firm and thus increase the life of your partnership.

An LLP must at all times maintain register with records of its members and their residential addresses. Again, the number of designated members of an LLP must never go below two. If it does, the law will assume that all the members of the firm are designated members. The status of an individual member can be amended at any time; but the Companies House must be duly notified of such a change. Apart from a register of members, an LLP must also maintain a register of debenture holders (of course, in cases when they issue debentures) and a register of charges (when the partnership enters into a charge); and these registers must always be available for inspection at the registered office or at an alternative location agreed upon by the Companies House.

Designated members of an LLP are responsible for sending an annual return within 28 days of it being made, failing which the registrar may strike the name of the business off of the index. This annual return includes the name of the LLP, its registration number, the date when the return is made, the registration address, any alternative address, and details of all members. The date when the annual return has to be made is decided by considering the date of incorporation of the LLP or the date of the previous annual return. Apart from the annual return, an LLP must prepare accounts about the activities of the partnership at the end of every financial year. In case of LLPs, the financial year usually ends with the last day of the month it was incorporated in. An LLP can change this accounting reference date by following the procedure laid down by the law. Also, an LLP can take a maximum of nine months from the end of its financial year to submit an accounts report. These nine months again can be extended to a maximum of eighteen months. For first accounts reports, however, the time-period designated are 21 months from the date of incorporation or 3 months from the end of the financial year whichever is greater.

A partnership must maintain a record of its accounts for the previous three years at all times; showing assets, liabilities, and entries for money credited or debited. This record must be kept at the registered office of the partnership or at an alternative location, previously agreed upon, for inspection purposes. Also, the accounts report duly signed by a designated member and accompanied by an auditor’s report must be circulated to all the members and debenture holders of the partnership. Of course, accounts must be conveyed to the Companies House as well. Designated members may choose to either file the same copy with the Companies House, or file an abbreviated version of the same.

Failing to submit the accounts reports on time is a criminal offence and is also attached with a late fee. If the filing deadline is on a holiday, the accounts have to be submitted before that day. Also, after submission the Companies House may reject an accounts report; and it does not sanction any extra time for reviewing. As such, it is advisable to submit the report well within time of the deadline. LLPs are categorized as small-sized, medium-sized, and dormant and the requirements for their accounts reports vary accordingly.

An LLP must appoint an auditor for every financial person. Auditor is the person who evaluates the accounts report and certifies that it has been prepared according to the norms of the Companies Act, 2006. The auditor’s report as mentioned earlier has to accompany the accounts report to every member and to the Companies House.

Charges and mortgages that are incurred by the LLP must be registered at the Companies House within 21 days of the creation of the charge. Charges that are included under this category are a little different for Scotland as of the rest of UK. However, in general, these charges may include charges on land, a security over a ship or aircraft or any share in a ship, a floating charge, among others.

Detailed information about these are available at the website maintained by the Companies House.