Which TWO of the following statements correctly describe the legal characteristics of a Limited Liability Partnership (LLP) formed under the Limited Liability Partnerships Act 2000?

Answer options:

An LLP has a separate legal personality from its members.

An LLP is subject to corporation tax on its profits.

Members of an LLP have unlimited liability for the debts of the business.

An LLP must file annual accounts with the Registrar of Companies.

How to approach this question

Compare the characteristics of an LLP with both traditional partnerships and limited companies.

Full Answer

A Limited Liability Partnership (LLP) is a corporate body with a separate legal personality (like a company), meaning it can contract and hold property in its own name, and its members have limited liability. It must file accounts with Companies House. However, for tax purposes, it is treated like a traditional partnership (tax transparent), meaning members pay income tax on their share of profits, not corporation tax.

Common mistakes

Assuming LLPs pay corporation tax because they are registered at Companies House.

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