Scottish limited partnerships (LP)

  • A Limited Partnership (LP) in Scotland is a type of partnership regulated by the Partnership Act of 1890 and the Limited Partnerships Act of 1907. As a legal entity, such a partnership is often helpful in cases where a traditional offshore company cannot be used for a number of reasons.
  • A Limited Partnership consists of one or more general partner or partners, who is-or-are liable for all debts and obligations of the partnership and who exercise its management, and one or more limited partner or partners, who has-or-have contributed to the partnership’s capital in the form of money and/or other property or assets with monetary value.
  • An LP registered in Scotland has a separate legal personality, whereas an LP registered in England (or in England & Wales) does not.
  • Any natural person or legal entity may be a partner in an LP regardless of their country of residence or citizenship.
  • A general partner may act on behalf of an LP, although such action may be executed also by other persons whom the partnership has so authorised through power of attorney.
  • “Tax transparency” rule. An LP itself is not subject to taxation in the UK. An LP’s profit is distributed between its partners, who must pay taxes in the country of their tax residence.
  • Legal entities incorporated in offshore jurisdictions may be partners in an LP, which may mean that such a legal entity has no liability for taxation in the UK.
  • In that context, Scottish partnerships are sometimes called “Scottish offshore companies”. Nevertheless, an LP cannot be considered offshore. Scotland, together with other parts of the UK, has none of the features of an offshore jurisdiction.
  • An LP and its partners must file annual tax returns.
  • An LP must prepare annual accounts but, where a general partner is a foreign company, i.e. it is not British, it is not required to file these accounts with Companies House.
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