As Scotland's popularity as a place with loyal financial policies increases, so does the number of sources talking about the delights of this jurisdiction and, as a result, about Limited Partnerships (Scottish LP) - a popular form of doing business without being burdened with excess tax payments. However, the more information, the more inaccuracies appear. Is it possible to obtain reliable data without having paid a personal visit to the Scottish fiscal authorities? Time to find out!
Financial statements
To the laws of Great Britain, you can safely apply the principle of "What is not prohibited is allowed". All company binding procedures are listed in the Company Act 1907, governing Scottish partnerships. Everything that is not on the list of "necessary" is permissible.
The link posted on the state home page makes some clarifications for LP companies: https://www.gov.uk/set-up-and-run-limited-partnership/partners-responsibilities. "You do not have to send accounts to Companies House unless the general partner is a limited company". "You are not required to submit reports to the Register of Companies if the main partner is not a limited liability company." The imperceptible “however” is a very significant remark.
Taxation
The Scottish LP Tax Law contains the following information:
2.26 As with an ordinary partnership a limited partnership is “tax transparent” (45). This is one of the main attractions for its use in the venture capital industry, and in property investment (46).
Like classic partnerships, limited partnerships have “tax transparency” (45). This form of business is one of the most attractive options for working with venture capital and real estate investment (46).
You can benefit from the Scottish LP perks if:
- the LP partners are individually responsible for their income, thereby relieving any financial burden from the partnership itself;
- the LP partners are not residents of Scotland.
- the partnership does not make a profit in Scotland.
It is worth mentioning that if LP partners have a residency status in tax-free jurisdiction, income taxes will amount to 0%.
Tax return
Scottish partnerships are exempt from the obligation to provide financial statements to the country's tax authorities if the company does not make profit in the UK. According to the established procedure, Scottish LPs must file a zero tax return with the appropriate services. This service is included in the price of the annually paid package for the extension of the partnership.
VAT (and / or) EORI
Such legal forms as Limited Partnerships are not suitable for activities involving VAT. In 98% of cases, a partnership does not receive a VAT identification number. As for EORI – if import-export operations are necessary, registering such a code will not imply any difficulty.
Publicly accessible register of beneficiaries
Under the Small Business, Enterprise and Employment Bill, all English companies are required to enter a publicly accessible register containing beneficiary data. However, if you look closely, the law contains the following concept: "persons with significant control".
Needless to say, such a person may not be the beneficial owner of the company. In fact, the names of the appointed directors, which often have a purely nominal origin, and, therefore, have nothing to do with the real beneficiaries, will be the ones published in public lists.
