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Amendment to Qualifying Partnership Regulations

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06 Aug 2013

Amendments to the Qualifying Partnership Regulations have been approved by Parliament, effective for periods beginning on or after 1 October 2013. The amendments (‘The Companies and Partnerships (Accounts and Audit) regulations 2013’) include an updated definition of a qualifying partnership, closing a loophole whereby some limited partnerships, in particular investment funds, have avoided filing accounts with the Registrar of Companies.

Under the ‘The Partnerships (Accounts) Regulations 2008’ [QP 2008 Reg 3(1)] a partnership (including a limited partnership) is a qualifying partnership if each of its members is 

  • A limited company; or
  • An unlimited company, or a Scottish partnership, each of whose members is a limited company. 

The regulations [QP 2008 Reg 2(2)] then state “any reference in the Qualifying Partnerships Regulations to the members of a qualifying partnership should be construed, in relation to a limited partnership, as a reference to its general partner or partners”. 

This implies that the status of the general partner or partners would be considered when determining whether the partnership is a qualifying partnership.  However, a view exists under the currently effective legislation (‘The Partnerships (Accounts) Regulations 2008’) that by having a single limited partner with unlimited liability, such as an individual, a partnership does not meet the definition of a qualifying partnership, despite the fact that their liability is limited by virtue of being a limited partner.  This view is supported by the fact that the Government has found it necessary to amend the law rather than issue clarifying guidance. 

The updated definition (link to approved regulations) of a qualifying partnership now ensures that when the partnership is a limited partnership, only the status of the general partners is taken into account when considering whether it is a qualifying partnership.  The effect is that more limited partnerships will fall under the definition of a qualifying partnership and, among other things, will need to prepare and file annual accounts and reports. 

In addition to updating the definition of a qualifying partnership, the amendments also revise the rules around the publication of accounts and amend the definition of members for the purposes of applying the requirements of the regulations.

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