Limited liability Partnerships
Written by Ray Coman
The main difference between an LLP and a limited company is that an LLP is taxed as a partnership. This presents opportunities and risks from a tax perspective. The requirements with HMRC are to file a tax return for each tax year, including from the date of incorporation to the following 5 April. The filing requirements with Companies House mirror that for limited companies. Additional possibilities arise for late filing penalties with an LLP.
Community Interest Companies
The requirements for Community Interest Companies (CICs) are the same as for other companies, except that it must also deliver a community interest report with its accounts. Additional fees are payable to CIC Regulator for incorporating and changing the name of a CIC.
Companies Limited by Guarantee
In a company limited by guarantee, there are no shareholders, but instead members who act as guarantors. The members are only liable to the amount, usually of a nominal sum, that they have guaranteed in the event of a winding up. These company structures are typical among housing associations and clubs. Where the association is not for profit, for instance where surplus service charges cannot be distributed to members, it would not be liable to corporation tax.
Flat management companies
In a flat management company, the freehold is owned by a company and the leaseholders each hold a share in that company. This provides a mechanism for the leaseholders to control the service charge and influence expenditure on communal parts. As a similar structure, a right to manage company is set up by long leaseholders in a flat complex and should be a company limited by guarantee. A further similar entity is a commonhold association in which members have freehold ownership of their flat and are members of a limited company which owns the common areas.
Charities which are incorporated have the same statutory requirements as other companies. Where the charity has gross income of less than £500,000, it should not be required to have a statutory audit, only an independent examination. Since 1 April 2009, the independent examination applies to charities with income of over £25,000. The independent examiner is often an accountant and the report is submitted to The Charity Commission. A charity would not be liable to corporation tax, unless its activities are not exempt. Consequently, HMRC compliance can be significantly reduced.
Whether your organisation has been set up in a particular way and you need assistance with the compliance requirements, or if you are seeking advice on the best structure for your business, we have various resources and expertise to help. Please contact us to discuss your situation.