2.16 In a limited liability partnership (LLP), the liability of each partner is limited through the Limited Liability Partnership Act 2000. As noted above under UK general and limited partnerships, there are potential limitations on the use of partnership structures in the public sector, particularly by local authorities (see Chapter 3).
2.17 A LLP combines features of both a UK partnership and a UK limited company and it can be formed to carry on any business. Frequently they are used when the members require fiscaltransparency as each member of a LLP is treated for UK tax purposes as being directly in receipt of its share of the profits or losses of the LLP (whether of an income or capital nature). Note that different jurisdictions use different structures, e.g. a Scottish LLP is different to an LLP set up under the law of England and Wales.
| Example 3: 'Forest Holidays' 50:50 limited liability partnership The Forestry Commission (FC) recognised that their holiday business had a greater potential and would benefit from external investment and holiday sector expertise, so in 2004-2005 they undertook a selection process to find an experienced partner to run Forest Holidays (FH) and to invest in existing and new sites. The objective was to develop a first class holiday business and to set Forest Holidays apart from its competitors. Following the competitive process, a JV entity was formed with the Camping and Caravanning Club to which the FC granted 75 year leases of the sites, the FH brand and business and a first, exclusive, opportunity to search for and develop further sites across the 1 million hectares of the FC's estate. The FC chose a JV arrangement as not only was it contributing assets and a going concern, it had a great deal to offer to the future development of the FH business. The FC manages most of the land surrounding the existing FH camp and cabin sites and, as the largest landowner in Great Britain, is key in supporting the future expansion of the business. A 50:50 deadlocked LLP was chosen as the corporate form of the JV following careful consideration of the existing form of the two JV partners, the desired governance and management arrangements for FH, as well as the treatment of future revenues and investors. Source: Partnerships UK plc and Forest Holidays |
2.18 The members usually enter a JV Agreement setting out their mutual rights and duties, as previously described in this Chapter and further detailed in Chapter 8.