Liquidating a bahamian company
Computation of taxable profits From 6 April 1999, all businesses, incorporated or not, have been required to compute their taxable profits using 'true and fair' accounting, subject to the specific requirements of taxation statutes and case law.The same principle will apply to LLPs, but with the important modification that LLPs will be required to adopt specific accounting practices as reflected in the Statement of Recommended Practice currently being drafted.However, as noted below, there are expected to be some further taxation provisions aimed at discouraging the use of LLPs for activities the Revenue perceives as objectionable tax avoidance.Taxation of LLPs: the 'transparency principle' Although the LLP has many of the legal attributes of a limited company, the government recognised from the start that existing firms would be reluctant to adopt LLP status if the tax regime was unattractive.The latter element may, therefore, result in somewhat higher work-in-progress figures being reflected in the tax computations of firms that convert to LLP status, while preserving the important exclusion of members' (formerly partners') time.Losses For professional businesses that adopt LLP status, there will be no material differences in the tax treatment of losses.The Department of Trade and Industry, the Inland Revenue and Customs & Excise have consulted in detail on the statute and regulations with the professional bodies.The Revenue published a helpful set of notes on the taxation of LLPs in its Tax Bulletin for December 2000, and I shall refer to these in both articles. The nature of the LLP Briefly, the LLP has some of the legal characteristics of a company in UK law, and some of those of a partnership.
As with such a partner-ship, each member will report his profit share on his personal tax return and the LLP itself will submit a return for the business as a whole.We will now look in more detail at the treatment of LLPs for the purpose of the various taxes.Income tax treatment of profits While the LLP is carrying on a business with a view to profit, its members will be treated for income tax purposes as if they were partners carrying on the business in partnership.From the same day, various changes to the Taxes Acts, which have been inserted by the LLPA, will also take effect.The final element of the legal framework for LLPs will be added by regulations dealing with their corporate governance and accounting procedures, which appeared in draft early in January 2001.
In an increasingly contentious and litigious society, the offer of a partnership with unlimited personal liability for the firm's debts is nowadays not always the attraction it might once have been to an aspiring professional.