Type of partnership

Partnership (including Scottish partnership)

A partnership is where two or more persons (partners) run a business together.

Please note: In the context of VAT, 'persons' can mean either an actual person or a 'legal' person, such as a company.

In England, Wales and Northern Ireland a partnership is not separate from the persons that are partners; it is the partners that are registered and not the business activity. Therefore all activities carried out by a partnership will be covered by one registration. In Scotland a partnership can be seen as separate from the partners and the same partners may set up two or more partnerships

For example, in England, Wales and Northern Ireland, a partnership with more than one business activity must operate under the one VAT Registration Number. Whereas, in Scotland the partnership may have a separate VAT Registration Number for each business activity.

Limited Partnership

A limited partnership is one in which at least one of the partners restricts their liability for the debts and obligations of the business to a pre-determined sum, instead of bearing unlimited liability as a general partner normally does. The partnership must consist of at least one general partner who manages the business and bears unlimited liability to creditors, and at least one limited partner.

A general partner is either a person, or 'legal' person (ie company) who bears unlimited liability to creditors.

Limited Liability Partnership

A Limited Liability Partnership (LLP) is similar to a normal partnership, but it offers reduced personal responsibility for business debts.

Unlike ordinary partnerships, the LLP itself - not the individual members - is responsible for any debts that it runs up, unless individual members have personally guaranteed a loan to the business. LLPs need to register with Companies House using form LL IN01.

LLPs should apply for VAT registration with HM Revenue & Customs as a corporate body.

Scottish Limited Partnership

A Scottish limited partnership consists of a general partner bearing unlimited liability and a number of limited partners and is set up under the law of Scotland.

A general partner is either a person, or 'legal' person (ie company) who bears unlimited liability to creditors.