Edited by Robert W. Hillman and Mark J. Loewenstein
Chapter 21: Partnership options in the UK: good things come in threes
The UK offers a range of business organizations including three types of partnership and five types of company, but competition to be the vehicle for a professional or trading business exists primarily among the three partnerships and the private company limited by shares, the other forms of company1 having much more specialized uses. There is also the possibility of carrying on business as a sole trader, but this option is not underpinned by specialist business organization laws. The three types of partnership are the general partnership, the limited partnership and the limited liability partnership (LLP) although, as will be seen, the latter is in fact a corporate body and in some ways more akin to a private limited company. These partnerships are significant both numerically and financially; it is estimated that they make up 10 percent of UK businesses with combined turnover of £150 million (Office of Tax Simplification 2014). Partnerships generally are intended to provide flexible and informal business vehicles (Law Commissions 2003: 3.3–3.6) and have traditionally offered autonomy and collegiality to professionals (Empson 2007). This chapter will provide a brief initial outline of each type of partnership and then evaluate their key attributes. These include integration of management and ownership, lack of a model agreement, tax transparency, and the application of company insolvency legislation, all of which are common to all three partnerships.
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