FID Trust International

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.

If you fail to file your LLP’s annual documents, i.e. annual return and accounts, the registrar may assume that the LLP is no longer carrying on business or in operation and take steps to strike it from the register. If the registrar strikes an LLP off the register, it ceases to exist and its assets become Crown property.

However where an LLP is in operation, the designated members could be prosecuted because they are personally responsible for ensuring that they submit the LLP’s annual documents on time. Failing to do so is a criminal offence. In addition, there is an automatic civil penalty for submitting accounts late.

By complying with your annual requirements and keeping your LLP public record up to date with the changes within your LLP you will avoid any action against the LLP or its members and it will give searchers an up to date picture of your LLP.

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.

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:

  1. it has been dormant since the end of the previous financial year;
  2. and it does not have to prepare group accounts for that year;
  3. 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.

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

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.

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.

Please contact us by telephone 0207 439 3400 (0044 207 439 3400 – International) or E-mail if you wish to join our growing list of clients.