LLP DOCUMENTATION

When you join a Limited Liability Partnership (LLP), there are a few documents that need to be signed in order to make it official. Below, we have detailed each document in plain English so you can gain an understanding of what it is you’re signing up for. We’ve included links to each of the HMRC forms in case you’re curious, however in most cases we’ll do all the boring stuff on your behalf.

HMRC FORMS

  • Registering a partner for Self-Assessment and Class 2 NICs (SA401) – This is a government form notifying HMRC that you now meet the criteria for Self-Assessment upon joining the LLP and will need to submit a Tax Return in due course. HMRC will issue you with a Unique Tax Reference (a 10-digit number) on receipt of this form and will send this ‘UTR’ to you in a letter. This is nothing to be alarmed about – you just need to send us a copy so we can arrange for your Tax Return to be completed.

  • Authorising your agent (64-8) – This is another government form which authorises us at OC to communicate with HMRC on your behalf, most notably allowing us to submit your Tax Return for you. Optimal Compliance will always deal with your tax queries relating to the business or other matters on a confidential basis.

 

Depending on a choice the business made when setting up the LLP, you will have one of two sets of documentation that will facilitate your transfer from the limited company to the LLP. It’s nothing to worry about – they’re simply two different ways of achieving the same result.

OPTIMAL COMPLIANCE DOCUMENTATION


PLEASE NOTE:
You won’t have all the documents listed below. The ‘Compromise Agreement’ and the ‘Transfer Agreement’ are interchangeable, as are the ‘Intellectual Property Agreement’ and the ‘IP Agreement’ (though not all members will have either of these).

Additionally, if you have a ‘Partnership Agreement’, you won’t have a ‘Deed of Adherence’ or a ‘Members Agreement’. Plus, all members won’t necessarily have all the documents anyway because of variations within the different partnerships.

If you have more questions about why this is, you’re always welcome to give us a ring.

Legal documents

  • Transfer Agreement – Similar to the Compromise Agreement, this agreement deals with the termination of your existing employment upon joining the LLP and establishes a compensatory award, used to fund your Capital Contribution as detailed in your Partnership Agreement, laid out below.


  • IP Agreement – This agreement deals with the continuing rights of the company to make use of your personal IP, given that you are no longer an employee of the company. Similar to the Transfer Agreement, you are awarded a capital sum which you use to fund your Capital Contribution.


  • Partnership AgreementThis agreement establishes the terms under which you will join the LLP. As such, this replaces your existing employment contract. That being said, the terms of any existing employment contract are carried over, meaning that all benefits based on your length of service, holidays, sick pay, and redundancy pay will be calculated using your original employment start date and not the date of joining the LLP. The Capital Contribution amount is funded from the amounts awarded in the two other agreements referred to above.


  • Compromise Agreement – This agreement deals with the termination of your existing employment upon joining the LLP and establishes a compensatory award, used to fund your Capital Contribution as detailed in your Deed of Adherence, laid out below.


  • Intellectual Property Agreement – This agreement deals with the continuing rights of the company to make use of your personal Intellectual Property (IP) given that you are no longer an employee of the company. Like the Compromise Agreement, you are awarded a capital sum which you use to fund your Capital Contribution.


  • Deed of Adherence – This is a short agreement confirming that you are joining the LLP under the terms of the Members’ Agreement below. The Capital Contribution amount is fully funded from the amounts awarded in the two other agreements referred to above.


  • Members’ Agreement – This is a central agreement dealing with the arrangements between the LLP and its members, including you. This replaces your existing employment contract, if you have one. That being said, the terms of any existing employment contract are carried over, meaning that all benefits based on your length of service, holidays, sick pay, and redundancy pay will be calculated using your original employment start date and not the date of joining the LLP.



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