In this week’s Q&A, Croner-i tax adviser Ibrahim Nalla, explains the tax liability when allocating profits to multiple members of a limited liability partnership
My client is a limited liability partnership (LLP) that has five members made up of two individual members, A and B, each owning 30% and 20% interest respectively. The third member is a company (VC Ltd) which owns the remaining 40% interest in the LLP.
Individual members C and D each own 5% of the LLP’s interest each. C and D are the only directors and shareholders of VC Ltd.
VC Ltd provides the LLP with various services such as marketing, accounting admin and office space, for which they do not charge a fee to the LLP.
The LLP is currently making a profit, are there any tax issues to consider?
This LLP is a mixed partnership as it has individual members and a non-individual member (VC Ltd).
