The United Kingdom offers a number of company structure formats to suit the needs of those wishing to invest their money within the country. Among them are the sole trader for those who want to undertake alone, the Limited Company where the members are legally separated from the incorporated company and finally the Partnerships where two or more people can establish an agreement to carry out business together. The latter are the ones we will present below.

Before starting to describe the structures of the associations, it is necessary to know that the United Kingdom has a quite favorable environment for business. For example, as an entry point, you should know that in the UK the registration of a partnership takes less than 24 hours.

Thus, its modern financial services, low and transparent bureaucracy, political stability and economic diversity, make the United Kingdom one of the main favorable countries for the investment of nationals and foreigners.

On the other hand, although the big island is not considered an offshore destination, it has certain degrees of confidentiality in the handling of the business that you carry out.

Partnerships in the United Kingdom

Partnerships are known to be fairly simple business structure formats. They do not have directors or shareholders, but partners who are on equal terms of management responsibility based on an agreement between them. This results in shared control of the business. 

Evidently, these conditions and others may vary according to what is established in the agreement between partners.

Types of UK Partnerships

There are three types of partnerships in the UK. These include the following: 

- "Ordinary" Partnerships

- Limited Partnerships

- Limited Liability Partnerships (LLP)

1.Ordinary Partnerships

According to the Partnership Act of 1890, partnerships are a group of two or more persons conducting business as a group. There is no legal separation between individuals and the partnership. That is, every act performed by any member of the partnership affects the partnership. Therefore, it can be said that person and company have the same face.

The latter involves that profits, debts and contract celebrations made with persons outside the partnership involve all members within the agreement. 

Requirements:

- Create a Government Gateway account to access the HCMR site.

- State the name of the company, address and members

- Submit details of the business activity to be carried out

2.Limited Partnership

They are a similar format to partnerships in terms of the establishment of an agreement between two or more persons. But it differs in that it is registered with Companies House. In addition, the partners can live outside British territory (however, they must have a place of business in British territory) and are exempt from submitting business accounts to Companies House.

Mostly it is a Structure Used by Investment Funds.

The structure also consists of a general partner and limited partners. The general partner is in charge of managing all activities related to the business and the limited partners have responsibilities limited by the amount of money they contribute.

Requirements:

- The registration of the partnership is made before the Companies House by filling the LP5 form.

- Detail the name of the company, the nature of the business, the place where the economic activity will be carried out, the names of the general partner and the limited partners.

3.Limited Liability Partnership

It is also a company management format formed by two or more members that was created in 2001 in the United Kingdom. Its functionality is a merger between the ordinary partnership and the limited partnership. However, unlike these, the LLP exists as a legal entity and can act on its own account to hold assets and make loans. 

It is usually used by companies related to professional services, legal or accounting firms, as well as companies in the real estate sector.

Part of the advantages offered by this format and for which it has become very famous is that the members are not directly liable for the debts incurred by it. 

Requirements:

- The registration is made before the Companies House filling the form LL IN01.

- It must detail the name of the company, the members that compose the association and the registered office.

- To have a registered office in the United Kingdom.

You should consider that choosing any of these types of structures results in different administrative procedures. However, at MUNDO we are at your service to advise and facilitate all of this. We have experienced local experts who will provide you with a quality service.

Confidentiality

One of the reasons that made many people choose the associations is because of the confidential nature of the associations' information regarding members and account statements. Some of the information was only available between those who were part of the partnership and the institution where it was registered. The information was not publicly available.

Today, due to the automation of bureaucratic processes, the House Companies has an open register of all companies registered in the United Kingdom. This information is available to the public. 

It specifies all the activity related to the companies. This makes the business environment in the UK more transparent. 

On the other hand, the HCMR in conjunction with the House Companies updated the manual of disclosure of information related to companies (IDG30310). It specifies the following points below.

Ordinary partnerships and limited partnerships are not required to submit their constitutional agreements to government institutions. This information is handled between partners. 

All information related to activities derived from the partnership must be disclosed in the declaration made to the HCMR. Such a declaration must specify each partner's share of profit, loss or credit. 

Similarly, Limited Liability Companies may keep the agreements of their members, but they are subject to submit their financial statements to the Companies House.

Taxes

Just as it is important that you are aware of the different types of partnerships that exist in the UK and the procedures for setting them up, you need to know how corporation tax returns work.

The actual amount of tax will depend on a number of factors, such as personal income, business profits, where you work from and other sources of income you may have. 

Guidance (HS380) relating to the payment of tax by members of HMRC partnerships stipulates that UK resident partners are liable to tax on the worldwide profits of the partnership. 

In addition, if the partnership operates overseas, the return is made on remittances earned on profits made overseas. 

Non-resident partners are exempt from filing tax returns only if the profits were not generated in the UK. 

Taxes Payable

You personally pay income tax on all gains after the personal tax allowance is exceeded (currently £12,500 per year).

- 20% up to £37,500.

- 40% from £37,500 to £150,000.

- 45% above 150,000 pounds

Consequences of Not Declaring Taxes

There is a series of penalties in case you incur in not declaring your taxes in the United Kingdom. In this case it can happen that HMRC collects what you owe through your earnings or pension, ask the tax collection agencies to collect the money, sell your property (in case you live in UK territory), take money from your bank accounts, take you to court, make you bankrupt and close down your business. 

What can we do for you?

At MUNDO we understand that these processes can be time consuming and difficult if only one person is in charge of doing it. That is why we provide you with a full line of experts in the field of company formation and business structures in the UK. 

We have an efficient and skilled group of corporate lawyers, tax advisors, auditors and accountants. You will be in good hands trusting our organization. Don't wait any longer and be part of a great experience towards the success of your business.

Contact us