Forming a UK Limited Liability Partnership (LLP)?

Question

I am interested to set up a UK Limited Liability Partnership. I am not a UK resident (though EU National). Two questions:
1. Am I subject to UK tax in such a case?
2. Suppose the answer for 1 is "no". How do I withdraw money from the LLP without paying any taxes to UK authorities? Do I just transfer it to my personal bank account?

Thanks.

Answer 1

The key advantage of a LLP compared with a traditional partnership is that the members of the LLP (it is important that they should not be called partners but members) are able to limit their personal liability if something goes wrong with the business, in much the same way as shareholders in a limited company are able to.
Where business owners have wanted to limit their personal liability in the past, they have normally set up limited companies and any profits made by those companies are subject to corporation tax. Dividends paid by the companies can then be taken as income of the shareholders. LLP's are taxed quite differently in that the profits are treated as the personal income of the members as if they had run their business as a partnership. The taxation of companies and partnerships is very different but taxation should not be the main consideration in choosing a business vehicle.
As to flexibility, the great benefit is in the ability to separate out different rights. For example, an entity seeding a new fund might be given rights to income (and then, only income from the fund they are seeding). An individual being made a member, or a retiring member, might also be given rights to a fixed level of income only, leaving the founders with the majority of voting rights and rights to assets on winding up. Some founders or other key team members might be given a different percentage of, say, voting rights compared to income rights. All these matters can be comfortably accommodated in the members' agreement.

Answer 2

Yes, the LLP is liable to UK tax, just as any other partnership is, and if you earn money in the UK you will pay Sched D tax on it.
As with any partnership, the money in it belongs to the partners and you can take out as much money as the partners agree, but the tax liability is your personally.

Answer 3

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