The Chartered Institute of Taxation (CIOT) sees no case for including LLPs within the government’s proposed prohibition of corporate directors, as suggested in the BIS Transparency and trust discussion paper on UK company ownership.
The paper proposes a default prohibition of corporate directors save in limited circumstances and suggests that, for consistency, LLPs should be included. This would mean that LLPs could be prohibited from having corporate members.
In a public letter dated 3 July and signed by Andrew Gotch (chairman of the Owner-managed Business Sub-Committee), the CIOT explains that the closest an LLP has to a ‘director’ is the role of ‘designated member’.
A prohibition on corporate members being designated members would make it impossible to form an LLP with only corporate members, when transparency could be achieved more simply by publicising the beneficial owners of the corporate member.
The letter insists that ‘a corporate LLP is a very useful and flexible commercial structure that is commonly used by legitimate businesses’ and adds that the proposed prohibition would have consequences for the venture capital sector, as limited partnerships are commonly used in investment partnerships.
Finally, the CIOT says that if the prohibition applies to existing corporate members, the unravelling of structures will lead to complex legal and tax issues.
The Chartered Institute of Taxation (CIOT) sees no case for including LLPs within the government’s proposed prohibition of corporate directors, as suggested in the BIS Transparency and trust discussion paper on UK company ownership.
The paper proposes a default prohibition of corporate directors save in limited circumstances and suggests that, for consistency, LLPs should be included. This would mean that LLPs could be prohibited from having corporate members.
In a public letter dated 3 July and signed by Andrew Gotch (chairman of the Owner-managed Business Sub-Committee), the CIOT explains that the closest an LLP has to a ‘director’ is the role of ‘designated member’.
A prohibition on corporate members being designated members would make it impossible to form an LLP with only corporate members, when transparency could be achieved more simply by publicising the beneficial owners of the corporate member.
The letter insists that ‘a corporate LLP is a very useful and flexible commercial structure that is commonly used by legitimate businesses’ and adds that the proposed prohibition would have consequences for the venture capital sector, as limited partnerships are commonly used in investment partnerships.
Finally, the CIOT says that if the prohibition applies to existing corporate members, the unravelling of structures will lead to complex legal and tax issues.
