Limited Liability Partnerships Bill [H.L.] - continued        House of Lords

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Taxation
Income tax and chargeable gains.     10. - (1) In the Income and Corporation Taxes Act 1988, after section 111 insert-
 
 
"Limited liability partnerships.     111A. For the purposes of the Tax Acts, a trade, profession or business carried on by a limited liability partnership shall be treated as carried on in partnership by its members (and not by the limited liability partnership as such); and accordingly the property of the limited liability partnership shall be treated for those purposes as partnership property."
 
      (2) In section 362(2)(a) of that Act (loan to buy into partnership), after "partner" insert "in a limited partnership registered under the Limited Partnerships Act 1907".
 
      (3) In the Taxation of Chargeable Gains Act 1992, after section 59 insert-
 
 
"Limited liability partnerships.     59A. Where a limited liability partnership carries on a trade or business-
 
    (a) assets held by the limited liability partnership shall be treated for the purposes of tax as held by its members as partners, and
 
    (b) any dealings by the limited liability partnership shall be treated for those purposes as dealings by its members in partnership (and not by the limited liability partnership as such),
  and tax in respect of chargeable gains accruing to the members of the limited liability partnership on the disposal of any of its assets shall be assessed and charged on them separately."
 
Inheritance tax.     11. In the Inheritance Tax Act 1984, after section 267 insert-
 
 
"Limited liability partnerships.     267A. For the purposes of this Act and any other enactments relating to inheritance tax-
 
    (a) property to which a limited liability partnership is entitled, or which it occupies or uses, shall be treated as property to which its members are entitled, or which they occupy or use, as partners,
 
    (b) any business carried on by a limited liability partnership shall be treated as carried on in partnership by its members,
 
    (c) incorporation, change in membership or dissolution of a limited liability partnership shall be treated as formation, alteration or dissolution of a partnership, and
 
    (d) any transfer of value made by or to a limited liability partnership shall be treated as made by or to its members in partnership (and not by or to the limited liability partnership as such)."
Stamp duty.     12. - (1) Stamp duty shall not be chargeable on an instrument by which property is conveyed or transferred by a person to a limited liability partnership in connection with its incorporation within the period of one year beginning with the date of incorporation if the following two conditions are satisfied.
 
      (2) The first condition is that immediately before its incorporation the person-
 
 
    (a) is a partner in a partnership comprised of all the persons who subscribe their names to the incorporation document (and no-one else), or
 
    (b) holds the property conveyed or transferred as nominee or bare trustee for one or more of the partners in such a partnership.
      (3) The second condition is that-
 
 
    (a) the proportions of the property conveyed or transferred to which the persons mentioned in subsection (2)(a) are entitled immediately after the conveyance or transfer are the same as those to which they were entitled immediately before its incorporation, or
 
    (b) none of the differences in those proportions has arisen as part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to any duty or tax.
      (4) For the purposes of subsection (2) a person holds property as bare trustee for a partner if the partner has the exclusive right (subject only to satisfying any outstanding charge, lien or other right of the trustee to resort to the property for payment of duty, taxes, costs or other outgoings) to direct how the property shall be dealt with.
 
      (5) An instrument in respect of which stamp duty is not chargeable by virtue of subsection (1) shall not be taken to be duly stamped unless-
 
 
    (a) it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty or that it is duly stamped, or
 
    (b) it is stamped with the duty to which it would be liable apart from that subsection.
 
Regulations
Insolvency and winding up.     13. - (1) Regulations shall make provision about the insolvency and winding up of limited liability partnerships by applying or incorporating, with such modifications as appear appropriate, Parts I to IV, VI and VII of the Insolvency Act 1986.
 
      (2) Regulations may make other provision about the insolvency and winding up of limited liability partnerships, and provision about the insolvency and winding up of oversea limited liability partnerships, by-
 
 
    (a) applying or incorporating, with such modifications as appear appropriate, any law relating to the insolvency or winding up of companies or other corporations which would not otherwise have effect in relation to them, or
 
    (b) providing for any law relating to the insolvency or winding up of companies or other corporations which would otherwise have effect in relation to them not to apply to them or to apply to them with such modifications as appear appropriate.
      (3) In this Act "oversea limited liability partnership" means a body incorporated or otherwise established outside Great Britain and having such connection with Great Britain, and such other features, as regulations may prescribe.
 
Application of company law etc.     14. Regulations may make provision about limited liability partnerships and oversea limited liability partnerships (not being provision about insolvency or winding up) by-
 
 
    (a) applying or incorporating, with such modifications as appear appropriate, any law relating to companies or other corporations which would not otherwise have effect in relation to them,
 
    (b) providing for any law relating to companies or other corporations which would otherwise have effect in relation to them not to apply to them or to apply to them with such modifications as appear appropriate, or
 
    (c) applying or incorporating, with such modifications as appear appropriate, any law relating to partnerships.
 
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