This information is a guide to winding up, your limited liability partnership or removing it from the register. The information summarises some of the rules that apply to voluntary arrangements, administration orders, receivers, and voluntary and compulsory liquidations. It also covers how and why limited liability partnerships are struck off and dissolved.

This information also covers how, in certain circumstances, your limited liability partnership may be restored to the register.

Please remember that if your limited liability partnership is considering liquidation, or any other measures to deal with insolvency, you should seek appropriate professional advice or consult an authorised insolvency practitioner.

You will find the relevant law in the Limited Liability Partnerships Act 2000, the Insolvency Rules (Scotland) 1986, and in the Limited Liability Partnerships (Scotland) Regulations 2001 which apply parts of the Companies Act 1985 (as amended in 1989 and later) and the Insolvency Act 1986 to limited liability partnerships.

1. What are insolvency proceedings?

These are formal measures to deal with debts of limited liability partnerships. Many different types of insolvency proceedings apply to limited liability partnerships. All are covered in this information.

2. Do all limited liability partnerships have to go through insolvency proceedings before being dissolved?

No. If the Registrar has reason to believe that a limited liability partnership is not carrying on business or is not in operation, he may strike its name off the register and dissolve it without going through liquidation. A limited liability partnership that is not trading may apply to the Registrar to be struck off the register. This procedure is not an alternative to formal insolvency proceedings.

More information about striking off and dissolution of a limited liability partnership is given in chapter 7 of this information.

3. Can anyone supervise insolvency procedures?

All liquidators, administrators, administrative receivers and supervisors taking office on or after 29 December 1986 must be authorised insolvency practitioners.

Receiver managers and Law of Property Act (LPA) receivers do not have to be authorised.

Insolvency practitioners may be authorised by:

• the Chartered Association of Certified Accountants;
• the Insolvency Practitioners’ Association;
• the Institute of Chartered Accountants in England and Wales;
• the Institute of Chartered Accountants in Ireland;
• the Institute of Chartered Accountants in Scotland;
• the Law Society;
• the Law Society of Scotland; or
• the Secretary of State for Trade and Industry.

4. What happens to the members of an insolvent limited liability partnership?

The liquidator, administrative receiver, administrator or Official Receiver has a duty to send the Secretary of State a report on the conduct of all members who were in office in the last three years of the limited liability partnership’s trading. The Secretary of State has to decide whether it is in the public interest to seek a disqualification order against a member.

Examples of the most commonly reported conduct might include:

• continuing to trade when the limited liability partnership was insolvent;
• failing to keep proper accounting records;
• failing to prepare and file accounts or make returns to Companies House; and
• failing to send in returns or pay to the Crown any tax that is due.

Tags: insolvency

This section explains the basic rules on preparing and filing accounts. It applies to all limited liability partnership accounts irrespective of whether any filing exemptions apply to the content of the accounts.

1. Do all limited liability partnerships have to keep accounting records?

Yes. All limited liability partnerships, whether or not they are trading, must keep accounting records.

2. What does a set of accounts include?

Generally, accounts must include:

• a profit and loss account;
• a balance sheet signed by a designated member;
• an auditors’ report signed by the auditor (if appropriate);
• notes to the accounts; and
• group accounts (if appropriate).

This information cannot go into the detailed information that these documents must contain - for this, see the Act. Certain information may be omitted from the accounts of medium-sized and small (including dormant) limited liability partnerships prepared under the special provisions of Part VII of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3 of the Limited Liability Partnerships Regulations 2001). These limited liability partnerships may further abbreviate the accounts they file at Companies House. Certain small limited liability partnerships and dormant limited liability partnerships may also be exempt from audit.

3. Do all limited liability partnerships have to deliver their accounts to the Registrar?

Yes.

4. What period must the accounts cover?

A limited liability partnership’s first accounts cover the period starting on the date of incorporation, not the first day of trading. They end on the accounting reference date (ARD) or up to 7 days either side of that date.

Subsequent accounts start on the day after the period covered by the previous accounts ended. They finish on the ARD or up to 7 days either side of it.

5. How long do I have to file my limited liability partnership’s first accounts?

If you are filing your first accounts and they cover a period of more than 12 months, they must be delivered to the Registrar within 22 months of the date of incorporation or 3 months from the ARD, whichever is longer. The definition in the box below of a period of months in connection with filing the accounts also applies to the first accounts. For example, a limited liability partnership incorporated on 1 January 2005 with an Accounting Reference Date (ARD) of 31 January has until midnight on 1 November 2006 (22 months from incorporation) to deliver its accounts, not 30 November.

6. How long do I normally have to file my accounts?

Unless you are filing your limited liability partnership’s first accounts (see question 5) the time normally allowed for delivering accounts is 10 months from the ARD.

However, if the accounting reference period has been shortened, the time allowed for filing the accounts is the longer of:

• 10 months from the ARD; or
• 3 months from the date of the notice (LLP225).

7. Can the time allowed for delivering accounts be extended?

If a limited liability partnership carries on business or has interests overseas, and the financial year begins before 1 January 2005, a 3-month extension to the normal filing period can be claimed by delivering Form LLP244 to Companies House. This form must be delivered before the normal filing deadline and this must be done for every year that the limited liability partnership wishes to claim the extension. It does not automatically apply from one year to the next. (Form LLP244 cannot be used for financial years, which begin on or after 1 January 2005 but an extension to the filing period may still be granted in exceptional circumstances - see below.)

An application may be made to the Secretary of State for Trade and Industry to extend the time for laying and delivering accounts if there is a special reason for doing so; for example, if there has been an unforeseen event which was outside the control of the limited liability partnership and its auditors. The application must be made in writing, be delivered before the filing deadline, and must contain a full explanation of the reasons for the extension and the length of the extension needed.

8. What if the accounts are delivered late?

There is an automatic civil penalty for late filing. The amount depends on how late the accounts arrive. The fixed penalties are as follows:

Failing to deliver accounts on time is also a criminal offence for which designated members may be prosecuted.

9. Who can approve and sign accounts?

The accounts must be approved by the limited liability partnership’s members and signed before they are sent to Companies House.

• The balance sheet must be signed by a designated member, with any statements about accounting or filing exemptions appearing above the designated member’s signature.
• If an auditors’ report or special auditors’ report is attached to the accounts, then it must state the names of the auditors and be signed and dated* by them.

* Applies to accounts covering a period beginning on or after 1 January 2005.

10. Does Companies House give technical advice on accounts?

No. Companies House can give general guidance, but not advice on specific accounting issues. Firstly, giving technical advice is not a role that the Government has given us. Secondly, it is not practicable: your accounts are subject to complex legal requirements, and Companies House do not know enough about your limited liability partnership to be confident that Companies House are giving you proper advice.

Consult an accountant if you need this sort of advice.

Tags: accounting records

1. What exemptions are available?

Certain small or medium-sized limited liability partnerships may prepare accounts for their members under the special provisions of sections 246 and 246A of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3 of the Limited Liability Partnerships Regulations 2001). In addition, they may prepare and deliver abbreviated accounts to the Registrar.

This section explains the exemptions available to small and medium-sized limited liability partnerships. Certain small limited liability partnerships with a turnover of less than £5.6 million and assets of less than £2.8 million can claim exemption from audit.

2. What is a small or medium-sized limited liability partnership?

Certain limited liability partnerships, especially in the regulated sectors, cannot qualify as small or medium-sized companies. Similarly, limited liability partnerships which are part of a group which has members who are public companies or companies in the regulated sector cannot qualify as small or medium-sized (except in certain circumstances). For other limited liability partnerships, the size of the limited liability partnership (and in the case of a parent limited liability partnership the size of the group headed by it) in terms of its turnover, balance sheet total (meaning the total of the fixed and current assets) and average number of employees determines whether it is classed as small or medium-sized. A summary of the conditions is given below.

To be a small limited liability partnership, at least 2 of the following conditions must be met:

Please note: The above accounting exemption thresholds apply to financial years beginning on or after 30 January 2004. For earlier financial years, to be a small limited liability partnership, at least two of the following conditions must be met:

• annual turnover must be £2.8 million or less;
• the balance sheet total must be £1.4 million or less;
• the average number of employees must be 50 or fewer.

To be a medium-sized limited liability partnership, at least 2 of the following conditions must be met:

• annual turnover must be £11.2 million or less;
• the balance sheet total must be £5.6 million or less;
• the average number of employees must be 250 or fewer.

Generally, a limited liability partnership qualifies as ’small’ or ‘medium-sized’ in its first financial year, or in any subsequent financial year if it fulfils the conditions in that year and the year before. If the limited liability partnership ceases to be small or medium-sized, the exemption continues for the first year that the limited liability partnership does not fulfil the conditions. The exemption continues uninterrupted if the limited liability partnership reverts to being small or medium-sized the following year - see the table below.

If you think the limited liability partnership might qualify as small or medium-sized, you should consult a professional accountant before you prepare ’special-provision’ accounts.

If you abbreviate the accounts, you will also need a special auditor’s report for filing with the Registrar, confirming that the limited liability partnership qualifies to produce such accounts. This report is not needed if the limited liability partnership is exempt from audit.

3. What does a small or medium-sized limited liability partnership have to deliver to the Registrar?

The limited liability partnership can deliver the accounts which were prepared for its members under the special provisions of Part VII of the Companies Act 1985 as applied to limited liability partnerships, or it can deliver an abbreviated version of these accounts.

Abbreviated accounts of a small limited liability partnership must include:

• the abbreviated balance sheet and notes; and
• a special auditor’s report (unless the limited liability partnership is also claiming audit exemption).

Abbreviated accounts of a medium-sized limited liability partnership must include:

• the abbreviated profit and loss account;
• the full balance sheet;
• a special auditor’s report; and
• notes to the accounts.

The special auditor’s report should state that in the auditor’s opinion the limited liability partnership is entitled to deliver abbreviated accounts and that they have been properly prepared in accordance with section 246(5) or (6) or 246A(3) of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3(1) of the Limited Liability Partnerships Regulations 2001), as the case may be.

The balance sheet must contain a statement that the accounts are prepared in accordance with the special provisions in Part VII of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3 of the Limited Liability Partnerships Regulations 2001) relating to small or medium-sized limited liability partnerships, as the case may be.

4. Are there special rules for small and medium-sized groups?

Yes, a parent limited liability partnership need not prepare group accounts or send them to the Registrar if the group is small or medium-sized and none of its members is a public company or a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity, or a person who carries on insurance market activity.

To qualify as small, a group must meet at least 2 of the following conditions:

• aggregate turnover must be £2.8 million net (£3.36 million gross) or less;
• the aggregate balance sheet total must be £1.4 million net (£1.68 million gross) or less;
• the aggregate average number of employees must be 50 or fewer.

To qualify as medium-sized, a group must satisfy at least 2 of the following conditions:

• aggregate turnover must be £22.8 million net (or £27.36 million gross);
• the aggregate balance sheet total must be £11.4 million net (or £13.68 million gross);
• the aggregate average number of employees must be 250 or fewer.

5. What if a small or medium-sized limited liability partnership is required to prepare group accounts?

A small parent limited liability partnership which has prepared individual accounts for its members using the special provisions of section 246(2) or (3) of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3 of the Limited Liability Partnerships Regulations 2001), may choose to prepare group accounts under the special provisions of section 248A. However, a small group cannot file abbreviated accounts at Companies House. Group accounts prepared under section 248A must contain a statement above the signature on the balance sheet, confirming that they are prepared in accordance with the special provisions of section 248A relating to small limited liability partnerships.

If a medium-sized limited liability partnership prepares group accounts, they must be full group accounts.

Tags: audit exemption

1. What exemption is available?

There is total exemption from audit for certain small limited liability partnerships if they are eligible and wish to take advantage of it. Further details about how to claim exemption are in this section.

2. Which small limited liability partnerships qualify for audit exemption?

To qualify for total audit exemption, a limited liability partnership must:

• qualify as small;
• have a turnover of not more than £5.6 million; and
• have a balance sheet total of not more than £2.8 million.

3. Are all types of small limited liability partnership eligible for the exemption?

No. Audited (rather than unaudited) accounts must be delivered to Companies House if the limited liability partnership falls into any of the following categories:

(a) A parent limited liability partnership or subsidiary undertaking (unless dormant for the period during which it was a subsidiary) except where the group:

• qualifies as a small group or would qualify if all the bodies corporate in the group were companies ; and
• the turnover for the whole group is not more than £5.6 million net (or £6.72 million gross); and
• the group’s combined balance sheet total is not more than £2.8 million net (or £3.36 million gross).

(b) A member of a group in which any member is:

• a public company or body corporate which (not being a company) has power under its constitution to offer shares or debentures to the public;
• a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity;
• a person who carries on insurance market activity.

(c) A person (other than a banking limited liability partnership) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity.

(d) For accounts delivered to the Registrar after 5 September 2005 a person who was during the relevant financial year an appointed representative within the meaning of s39 of the Financial Services and Markets Act 2000 (other than an appointed representative whose scope of appointment is limited to activities that are not regulated activities – see below).

“Regulated activity” does not include:

• arranging regulated mortgage contracts;
• assisting administration and performance of a contract of insurance;
• advising on regulated mortgage contracts; or
• dealing as agent, arranging deals in investments or advising on investments – where the activity concerns relevant investments that are not contractually based investment.

(e) A special register body or employers association under the Trade Union and Labour Relations (Consolidation) Act 1992.

4. What does an audit-exempt limited liability partnership need to send to Companies House?

If the limited liability partnership qualifies, unaudited accounts may be delivered to the Registrar in the form of an abbreviated balance sheet and notes containing statements to the following effect above the designated member’s signature:

1. For the year ended . . . (date) the limited liability partnership was entitled to exemption under section 249A(1) of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3 of the Limited Liability Partnerships Regulations 2001).
2. The members acknowledge their responsibility for:
   • ensuring the limited liability partnership keeps accounting records which comply with section 221; and
   • preparing accounts which give a true and fair view of the state of affairs of the limited liability partnership as at the end of the financial year, and of its profit or loss for the financial year, in accordance with the requirements of section 226, and which otherwise comply with the requirements of the Companies Act relating to accounts, so far as applicable to the limited liability partnership.
3. The accounts have been prepared in accordance with the special provisions in Part VII of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3 of the Limited Liability Partnerships Regulations 2001) relating to small limited liability partnerships.

If the limited liability partnership chooses, it may deliver the unabbreviated accounts prepared for its members. The same statements must appear on the unabbreviated balance sheet.

Please Note:
The statements for audit exemption should not include reference to section 249b(2), the members not requiring an audit. This section of the Act does not apply to LLPs and the statement should not be included on the balance sheet.

5. How long do I have to deliver accounts to Companies House?

The same time applies as for all other accounts. The same penalties are imposed for late filing.

6. Does an audit-exempt limited liability partnership still have to send accounts to its members?

Yes. In accordance with the Act, members have a right to receive and demand copies of the accounts.

7. Are annual accounts required if a limited liability partnership is not trading?

All limited liability partnerships, whether they trade or not, must prepare and deliver accounts to Companies House. However, a limited liability partnership may claim exemption from audit as a ‘dormant limited liability partnership’ if it has not traded during a financial year, and provided it meets certain other criteria.

Dormant limited liability partnerships do not need to appoint auditors and can deliver even simpler annual accounts to Companies House. For more information about dormant accounts, see the next section of this information.

Tags: audit exemption

1. What exemption is available?

Dormant limited liability partnerships can claim exemption from audit and need only deliver to Companies House an abbreviated balance sheet and notes. A profit-and-loss account does not have to be included in dormant accounts filed at Companies House. However, fuller accounts must still be prepared for members, possibly including a profit and loss account if the limited liability partnership traded in the previous year.

2. What is a dormant limited liability partnership?

A limited liability partnership is dormant if it has had no ’significant accounting transactions’ during the period.

‘Significant accounting transactions’ are transactions which are required to be entered in a limited liability partnership’s accounting records, but when considering whether the limited liability partnership is dormant, you can disregard the following financial transactions:

• fees paid to the Registrar for a change of limited liability partnership name and filing annual returns; and
• civil penalties imposed for delivering accounts to the Registrar after the statutory time allowed for filing.

A limited liability partnership may not take advantage of dormant status if it is a person (other than a banking limited liability partnership) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity.

If the limited liability partnership has not been dormant since incorporation, but has become dormant, it may take advantage of the exemptions provided that:

• it has been dormant since the end of the previous financial year; and
• it does not have to prepare group accounts for that year; and
• it qualifies as a ’small limited liability partnership’ in relation to that year, or would have qualified as small but for the fact that it is a member of a group which included: a public company or body corporate which (not being a company) has power under its constitution to offer shares or debentures to the public, a person who has permission under Part 4 of the Financial Service and Markets Act 2000 to carry on a regulated activity, or a person who carries on insurance market activity.

3. What information must dormant accounts contain?

Dormant accounts filed at Companies House need not include a profit-and-loss account.

4. What statements are needed on the balance sheet?

The following statements must appear above the designated member’s signature

1. For the year ended . . . (date) the limited liability partnership was entitled to exemption under section 249AA(1) of the Companies Act 1985 (as applied to limited liability partnerships by regulation 3 of the Limited Liability Partnerships Regulations 2001).
2. The members acknowledge their responsibility for:
   • ensuring the limited liability partnership keeps accounting records which comply with section 221; and
   • preparing accounts which give a true and fair view of the state of affairs of the limited liability partnership as at the end of the financial year, and of its profit or loss for the financial year, in accordance with the requirements of section 226, and which otherwise comply with the requirements of the Companies Act relating to accounts, so far as applicable to the limited liability partnership.

   Please Note:

   The statements for audit exemption should not include reference to section 249b(2), the members not requiring an audit. This section of the Act does not apply to LLPs and the statement should not be included on the balance sheet.

5. How long do I have to deliver dormant accounts to Companies House?

The same time applies as for all other accounts. The same penalties are imposed for late filing.

6. What happens if my limited liability partnership starts trading again?

Any limited liability partnership exempt from the need to appoint auditors by reason of being dormant will cease to be exempt if the limited liability partnership:

• begins commercial or trading activities during the financial period; or
• disposed of an asset, settled a liability or conducted some other non-exempt transaction; or
• would no longer qualify for some other reason.

If any of these happened, fuller accounts would be required for the financial year in which the limited liability partnership ceased to be exempt, and the members might need to appoint auditors for the limited liability partnership. It may be that the limited liability partnership would qualify for certain exemptions as a medium-sized or small limited liability partnership.

Tags: audit exemption