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Union Voices Concern Over Limited Partnership Proposals

New proposals to apply a strike off procedure to agricultural limited partnerships who do not comply with annual confirmation statement requirements, have been criticised by NFU Scotland.

The new proposals are part of UK Government’s commitment to reforming the regulatory requirements of limited partnerships and preventing their misuse.


Today, Monday 6 August, marks the first anniversary of the introduction of regulations designed to improve the transparency of those who own and control UK companies is approaching. These changes made by UK Government introduced a new requirement for the filing of an annual return to Companies House. The Union is concerned that there is a lack of understanding within the industry about the new requirements, and the potential penalties for non-compliance with these.

Limited Partnerships are commonly used within agricultural business in Scotland, due to their tax efficient nature. However, prior to 2003 they were also used as a tenancy option, and there are around 500 such agreements still in operation.  Such tenancies were traditionally used to avoid granting full ‘secure’ tenancies. The landlord (limited partner) entered into a limited partnership with the tenant (general partner), and then granted a lease to the limited partnership. As such, limited liability was granted to the landlord, with the tenant being liable for the debts and obligations of the limited partnership.

A year on from the previous changes, the UK Government is consulting on new proposals that will provide the Registrar with powers to strike off limited partnerships who fail to comply the reporting requirements.

In response to the recent consultation, NFU Scotland has reiterated that it does believe, and has seen no evidence to suggest, that agricultural limited partnerships have been used as vehicles for any form of criminality

NFU Scotland Legal and Technical Policy Manager Gemma Cooper commented: “Limited Partnerships have operated with agriculture for some time. They are attractive because of the tax advantages that they provide, as partners are taxed only on the profits arising from the limited partnership.

“The Union has concerns regarding the unintended consequences for agricultural tenancies of this proposal. More specifically, to the proposal for ‘non-operating strike-off’, whereby a limited partnership’s failure to deliver a confirmation statement would lead to the Registrars’ belief that the partnership is not in operation.  The consequences of this could be the limited partnership losing limited liability, something we believe could lead to the potential for legal claims and European Convention on Human Rights issues.

“Anecdotally, we know that awareness of the reporting requirement is low. We are urging UK Government to work with industry to raise awareness, and to find solutions which do not rely on potentially damaging changes such as this.” Ends

Notes to Editors


Contact Ruth McClean on 0131 472 4108

Author: Ruth McClean

Date Published:

News Article No.: 108/18


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About The Author

Ruth McClean

Having worked in the communications and journalism industry for the last 11 years, NFU Scotland’s Communications Manager Ruth McClean understands the needs of journalists and has extensive knowledge of the wider agricultural industry. After growing up in Argyll and Bute and working in the area as a reporter for local newspapers for eight years, Ruth joined NFU Scotland in 2013 in her current role. She is also Editor of the Union’s membership magazine the Scottish Farming Leader.

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