7.1 A limited partnership is still a shared venture with a view to a profit, but it introduces a form of limited liability. It involves two different classes of partner. General partners take part in the day-to-day management of the business, and have unlimited joint and several liability. Limited partners contribute capital, in the form of cash or property, but take no part in the day-to-day management of the business, and their liabilities are limited to the assets which they contribute to the partnership. So, if the joint venture fails, they stand to lose the cash or property which they have put in, but are not liable for the wider debts incurred by the limited partnership.
7.2 Because a limited partnership is tax-transparent, it can be a useful vehicle for local authority participation as a partner in a property transaction, since it enables the local authority to contribute land and to take its share of the development profit without deducting tax, but it is not widely used by local authorities for other purposes.