Under the UK’s Limited Liability Partnerships Act 2000, a limited liability partnership (“UK LLP”) is treated in the UK as a separate legal entity, but the profits of its business are taxed as if the business were carried on by partners in partnership, rather than by a body corporate
CRA stated that it would consider the UK LLP to be a corporation. Under its two-step approach, it looks at the entity’s characteristics under foreign law, and at the characteristics of different forms of association under Canadian commercial law. Having regard to the following attributes of the UK LLP, it would be regarded as a corporation:
- A UK LLP has a legal existence separate from its members.
- A UK LLP, and not its members, carry on the business.
- A UK LLP, and not its members, acquires and owns property in its own name for use in its business, and is responsible for any debts or obligations incurred as a result of carrying on its business.
- The capital of a UK LLP serves the same function as the share capital of a corporation.