The Scottish Limited Partnership

Scottish limited partnership formation vs English limited partnership registration

Scottish limited partnerships registration and
 English limited partnerships formation are very similar in some ways and very different in others. When forming a limited partnership in either country you must have at least two partners, a general partner and a limited partner. You can have more but the minimum to you need to form the Scottish or English limited partnership is two.
General partners are liable for any partnership debts or obligations, whereas limited partners are only liable for the same amount as they have invested into the partnership. Limited partners can invest cash or property into the business. General partners, because of their increased stake in the partnership, have control over how the business is run. If a limited partner takes part in running the business in any way they he risks being seen as liable over and above his stake in the partnership.

Scottish limited partnerships as a separate legal entity: unlike English limited partnerships, Scottish limited partnerships can have their own legal identity. This separates the Scottish limited partnership from its partners and can be advantageous because it lessens the partner’s responsibilities and liabilities.

Having the partnership as a separate entity means that it can raise legal actions and own property in its own name, an option not open to English limited partnerships. With an English limited partnership, the partners do not have the option to register the business as a separate legal entity so they remain fully liable for any debts and obligations throughout the partnership’s lifetime.


It is worth noting that registering a Scottish limited partnership as a separate legal entity in Scotland doesn’t necessarily mean that it will be known as such in other countries. This means that outside of Scotland, the limited partnership could be seen as a single legal entity with its partners, making them personally liable for obligation and debt fulfilment in that country.

A review of partnership law was carried out in 2003 between the Scottish, English and Welsh Law Commissions with the view to enabling limited partnerships in England and Wales to be registered as separate entities. However, it could be some time before this happens.


Scottish Limited Partnership (SLP) And Main Advantages



Scotland is part of the United Kingdom, a leading global financial and business centre and an important jurisdiction for international tax planning. The UK is known internationally as a jurisdiction with a standard level of taxation. However, Scottish law provides the opportunity for registration and operation of companies with a zero tax rate by means of a Limited Partnership (L.P.).

The Scottish Limited Partnership (SLP) is governed by the Limited Partnerships Act 1907 and for registration purposes, must have its principal place of business in Scotland.  Unlike LP’s registered under the 1907 Act in England & Wales, a Scottish LP has a separate legal personality meaning that it can amongst other things, contract and hold assets in its own name.


Scottish Limited Partnership (SLP)

A Scottish limited partnership (SLP) is a unique vehicle. Although it has been around for over a century, the SLP has been used in recent times for modern business purposes such as private equity and property investment fund structures. This article looks at the advantages of the SLP which make it so attractive to fund managers, promoters and investors, both domestic and overseas.

Advantages of the SLP


The main advantages of the Scottish Partnership (Scottish Limited Partnership, Scottish LP)

  • There are no taxes in the UK providing that the partnership does not trade in the UK and partners are not residents of the UK. Partners are taxed in the jurisdiction of their location.
  • No requirements to submit financial statements in the Register of Enterprises.
  • No requirements to submit a tax declaration in the Register of Enterprises.
  • Internationally recognized jurisdiction with an excellent reputation
  • High confidentiality

The legal requirement that the limited partners are not entitled to participate in the management of the company, makes Scottish LP an ideal mean for investment structures with a large number of partners, where management and control are assigned to the general partner or manager appointed by the general partner.



Uses of a Scottish Limited Partnership


A Scottish L.P. is an ideal solution for those who prefer to operate a company incorporated in the EU and to have a totally tax-free facility at the same time.

  • Funds structures
  • SLPs can be used flexibly in funds structures.
  • SLP as the main fund vehicle
  • The SLP can be a main funds vehicle because:
  • It can hold assets in its own name;
  • There can be multiple but passive investors (the limited partners);
  • Only one person manages the investments and business of the partnership (the general partner);
  • Tax transparency means that each partner is taxed on the profits it receives, the amount of which will be determined by the limited partnership agreement.


Update – Sept 22nd 2022

22 September 2022, the UK government introduced the Economic Crime & Corporate Transparency Bill to parliament. The Bill contains provisions that will deliver reforms to Companies House, reforms to prevent the abuse of limited partnerships, additional powers to seize and recover suspected criminal crypto assets and reforms to encourage businesses to share information to tackle money laundering and other economic crime.

“These provisions will bear down further on kleptocrats, criminals and terrorists who abuse our financial system, strengthening the UK’s reputation as a place where legitimate business can thrive, whilst driving dirty money out of the UK,” said the government.

The Bill will reform the role of Companies House by introducing identity verification for all new and existing registered company directors, ‘People with Significant Control’ and those delivering documents to the Registrar.

It will also expand the powers of Registrar of Companies House, including new powers to check, remove or decline information submitted to, or already on, the companies register. Companies House will be able to proactively share information with law enforcement bodies where it has evidence of anomalous filings or suspicious behaviour.

The Bill will tackle the misuse of limited partnerships, including Scottish limited partnerships, by tightening registration requirements, requiring limited partnerships to maintain a connection to the UK, increasing transparency requirements and enabling the Registrar to deregister limited partnerships that are dissolved, no longer carrying on business or where a court orders it in the public interest.

The Bill will provide additional powers to law enforcement to seize and recover crypto assets that are the proceeds of crime or associated with illicit activity such as money laundering, fraud and ransomware attacks.

Finally, the Bill will strengthen anti-money laundering powers, enabling better information sharing on suspected money laundering, fraud and other economic crimes. The reforms will:

  •  Enable businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime
  • Enable proactive intelligence gathering by law enforcement and strengthening the National Crime Agency’s Financial Intelligence Unit’s (FIU) ability to obtain information from businesses relating to money laundering and terrorist financing by removing the requirement for a pre-existing Suspicious Activity Report (SAR) to have been submitted before an Information Order (IO) can be made
  • Focus private sector and law enforcement resources on high value activity, reducing the reporting burden on businesses and enabling greater prioritisation of law enforcement resource by expanding the types of case in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering (DAML) SAR

The Bill was due to be given its second reading in October. It follows the Economic Crime (Transparency and Enforcement) 2022 Act (ECTE), which was brought into force rapidly on 15 March 2022 in the wake of Russia’s invasion of Ukraine.

The ECTE Act was introduced to enable the government to move faster and harder when imposing sanctions, to help target foreign criminals using UK property to launder money by creating a new Register of Overseas Entities, and to support law enforcement investigations by reforming and strengthening the UK’s Unexplained Wealth Order regime.


Table of Contents: The Scottish Limited Partnership

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