The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008

Made: 17th July 2008

Coming into force: 1st October 2008

The Secretary of State makes the following Regulations in exercise of the powers conferred by sections 15 and 17 of the Limited Liability Partnerships Act 2000 and sections 1210(1)(h) and 1292(2) of the Companies Act 2006 .

In accordance with section 17(4) and (5)(b) of the Limited Liability Partnerships Act 2000 and sections 1290 and 1292(4) of the Companies Act 2006, a draft of this instrument was laid before Parliament and approved by a resolution of each House of Parliament.

PART 1 — GENERAL INTRODUCTORY PROVISIONS

Citation and commencement

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These Regulations may be cited as the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 and come into force on 1st October 2008.

Application

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• (1) Subject to paragraphs (2) to (11), these Regulations apply to accounts for financial years beginning on or after 1st October 2008.

• (2) Any question whether—

• (a) for the purposes of section 382, 383, 384(3) or 467(3) of the Companies Act 2006, as applied to limited liability partnerships by regulations 5 and 26, a limited liability partnership or group qualified as small in a financial year beginning before 1st October 2008, or

• (b) for the purposes of section 465 or 466 of that Act, as applied to limited liability partnerships by regulation 26, a limited liability partnership or group qualified as medium-sized in any such financial year,

is to be determined by reference to the corresponding provisions of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 as applied to limited liability partnerships by the Limited Liability Partnerships Regulations 2001 or the Limited Liability Partnerships Regulations (Northern Ireland) 2004 .

• (3) Sections 485 to 488 of the Companies Act 2006, as applied to limited liability partnerships by regulation 36, apply in relation to appointments of auditors for financial years beginning on or after 1st October 2008.

• (4) Sections 492, 494 and 499 to 501 of the Companies Act 2006, as applied to limited liability partnerships by regulations 37, 38 and 40, apply to auditors appointed for financial years beginning on or after 1st October 2008.

• (5) Section 502 of the Companies Act 2006, as applied to limited liability partnerships by regulation 40, applies to auditors appointed on or after 1st October 2008.

• (6) Sections 495, 498 and 503 to 509 of the Companies Act 2006, as applied to limited liability partnerships by regulations 39 to 42, apply to auditors' reports on accounts for financial years beginning on or after 1st October 2008.

• (7) Sections 510 to 513 of the Companies Act 2006, as applied to limited liability partnerships by regulations 43 and 44, apply where notice of the proposed removal is given to the auditor on or after 1st October 2008.

• (8) Section 515 of the Companies Act 2006, as applied to limited liability partnerships by regulation 45, applies to appointments of auditors for financial years beginning on or after 1st October 2008.

• (9) Sections 516 to 518 of the Companies Act 2006, as applied to limited liability partnerships by regulation 45, apply to resignations occurring on or after 1st October 2008.

• (10) Sections 519 to 525 of the Companies Act 2006, as applied to limited liability partnerships by regulation 46, apply where the auditor ceases to hold office on or after 1st October 2008.

• (11) Section 526 of the Companies Act 2006, as applied to limited liability partnerships by regulation 46, applies where the vacancy occurs on or after 1st October 2008.

Interpretation

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• (1) In these Regulations—

• “1985 Act” means the Companies Act 1985,

• “1986 Order” means the Companies (Northern Ireland) Order 1986, and

• “LLP” means a limited liability partnership registered under the Limited Liability Partnerships Act 2000.

• (2) In these Regulations, unless the context otherwise requires—

• (a) any reference to a numbered Part, section or Schedule is to the Part, section or Schedule so numbered in the Companies Act 2006,

• (b) references in provisions applied to LLPs to other provisions of the Companies Act 2006 are to those provisions as applied to LLPs by these Regulations, and

• (c) references in provisions applied to LLPs to provisions of the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 are to those provisions as applied to LLPs by the Limited Liability Partnerships Regulations 2001 or the Limited Liability Partnerships Regulations (Northern Ireland) 2004 .

Scheme of Part 15 as applied to LLPs

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Section 380 applies to LLPs, modified so that it reads as follows—

(380) (1) The requirements of this Part as to accounts, auditor’s reports and energy and carbon reports apply in relation to each financial year of an LLP. (2) In certain respects different provisions apply to different kinds of LLP. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 2 — LLPs QUALIFYING AS SMALL

LLPs subject to the small LLPs regime

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Sections 381 to 384 apply to LLPs, modified so that they read as follows—

(381) The small LLPs regime applies to an LLP for a financial year in relation to which the LLP— (a) qualifies as small (see sections 382 and 383), and (b) is not excluded from the regime (see section 384). (382) (1) An LLP qualifies as small in relation to its first financial year if the qualifying conditions are met in that year. (1A) Subject to subsection (2), an LLP qualifies as small in relation to a subsequent financial year if the qualifying conditions are met in that year. (2) In relation to a subsequent financial year, where on its balance sheet date an LLP meets or ceases to meet the qualifying conditions, that affects its qualification as a small LLP only if it occurs in two consecutive financial years. (3) The qualifying conditions are met by an LLP in a year in which it satisfies two or more of the following requirements—

(4) For a period that is an LLP's financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted. (5) The balance sheet total means the aggregate of the amounts shown as assets in the LLP's balance sheet. (6) The number of employees means the average number of persons employed by the LLP in the year, determined as follows— (a) find for each month in the financial year the number of persons employed under contracts of service by the LLP in that month (whether throughout the month or not), (b) add together the monthly totals, and (c) divide by the number of months in the financial year. (7) This section is subject to section 383 (LLPs qualifying as small: parent LLPs). (383) (1) A parent LLP qualifies as a small LLP in relation to a financial year only if the group headed by it qualifies as a small group. (2) A group qualifies as small in relation to the parent LLP's first financial year if the qualifying conditions are met in that year. (2A) Subject to subsection (3), a group qualifies as small in relation to a subsequent financial year of the parent LLP if the qualifying conditions are met in that year. (3) In relation to a subsequent financial year of the parent LLP, where on the parent LLP’s balance sheet date the group meets or ceases to meet the qualifying conditions, that affects the group’s qualification as a small group only if it occurs in two consecutive financial years. (4) The qualifying conditions are met by a group in a year in which it satisfies two or more of the following requirements—

(5) The aggregate figures are ascertained by aggregating the relevant figures determined in accordance with section 382 for each member of the group. (6) In relation to the aggregate figures for turnover and balance sheet total— - “net” means after any set-offs and other adjustments made to eliminate group transactions— 1. in the case of non-IAS accounts in accordance with Part 1 of Schedule 4 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 (S.I. 2008/1912) or Schedule 3 to the Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008 (S.I. 2008/1913), 2. in the case of IAS accounts, in accordance with UK-adopted international accounting standards; and - “gross” means without those set-offs and other adjustments. An LLP may satisfy any relevant requirement on the basis of either the net or the gross figure. (7) The figures for each subsidiary undertaking shall be those included in its individual accounts for the relevant financial year, that is— (a) if its financial year ends with that of the parent LLP, that financial year, and (b) if not, its financial year ending last before the end of the financial year of the parent LLP. If those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures shall be taken. (384) (1) The small LLPs regime does not apply to an LLP that ... was at any time within the financial year to which the accounts relate— (a) a traded LLP, (b) an LLP that— (i) is an authorised insurance company, a banking LLP, an e-money issuer, a MiFID investment firm or a UCITS management company, or (ii) carries on insurance market activity, or (iii) is a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 (interpretation of Part 1), or (c) a member of an ineligible group. (2) A group is ineligible if any of its members is— (a) a traded company, (b) a body corporate (other than a company) whose shares are admitted to trading on a UK regulated market, (c) a person (other than a small company or small LLP) who has permission under Part 4A of the Financial Services and Markets Act 2000 (c.8) to carry on a regulated activity, (ca) an e-money issuer, (d) a small company or small LLP that is an authorised insurance company, a banking company or banking LLP, ... a MiFID investment firm or a UCITS management company, or (e) a person who carries on insurance market activity, or (f) a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 (interpretation of Part 1). (3) A company or LLP is a small company or small LLP for the purposes of subsection (2) if it qualified as small in relation to its last financial year ending on or before the end of the financial year to which the accounts relate.

PART 3 — ACCOUNTING RECORDS

LLP's accounting records

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Sections 386 to 389 apply to LLPs, modified so that they read as follows—

(386) (1) Every LLP must keep adequate accounting records. (2) Adequate accounting records means records that are sufficient— (a) to show and explain the LLP's transactions, (b) to disclose with reasonable accuracy, at any time, the financial position of the LLP at that time, and (c) to enable the members of the LLP to ensure that any accounts required to be prepared comply with the requirements of this Act. (3) Accounting records must, in particular, contain— (a) entries from day to day of all sums of money received and expended by the LLP and the matters in respect of which the receipt and expenditure takes place, and (b) a record of the assets and liabilities of the LLP. (4) If the LLP's business involves dealing in goods, the accounting records must contain— (a) statements of stock held by the LLP at the end of each financial year of the LLP, (b) all statements of stocktakings from which any statement of stock as is mentioned in paragraph (a) has been or is to be prepared, and (c) except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased, showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified. (5) A parent LLP that has a subsidiary undertaking in relation to which the above requirements do not apply must take reasonable steps to secure that the undertaking keeps such accounting records as to enable the members of the parent LLP to ensure that any accounts required to be prepared under this Part comply with the requirements of this Act. (387) (1) If an LLP fails to comply with any provision of section 386 (duty to keep accounting records), an offence is committed by every member of the LLP who is in default. (2) It is a defence for a person charged with such an offence to show that he acted honestly and that in the circumstances in which the LLP's business was carried on the default was excusable. (3) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both); (b) on summary conviction— (i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both); (ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both). (388) (1) An LLP's accounting records— (a) must be kept at its registered office or such other place as the members think fit, and (b) must at all times be open to inspection by the members of the LLP. (2) If accounting records are kept at a place outside the United Kingdom, accounts and returns with respect to the business dealt with in the accounting records so kept must be sent to, and kept at, a place in the United Kingdom, and must at all times be open to such inspection. (3) The accounts and returns to be sent to the United Kingdom must be such as to— (a) disclose with reasonable accuracy the financial position of the business in question at intervals of not more than six months, and (b) enable the members of the LLP to ensure that the accounts required to be prepared under this Part comply with the requirements of this Act. (4) Accounting records that an LLP is required by section 386 to keep must be preserved by it for three years from the date on which they are made. (5) Subsection (4) is subject to any provision contained in rules made under section 411 of the Insolvency Act 1986 (c.45) (company insolvency rules) or Article 359 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)). (389) (1) If an LLP fails to comply with any provision of subsections (1) to (3) of section 388 (requirements as to keeping of accounting records), an offence is committed by every member of the LLP who is in default. (2) It is a defence for a person charged with such an offence to show that he acted honestly and that in the circumstances in which the LLP's business was carried on the default was excusable. (3) A member of an LLP commits an offence if he— (a) fails to take all reasonable steps for securing compliance by the LLP with subsection (4) of that section (period for which records to be preserved), or (b) intentionally causes any default by the LLP under that subsection. (4) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both); (b) on summary conviction— (i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both); (ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).

PART 4 — FINANCIAL YEARS

An LLP's financial year

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• (1) Sections 390 to 392 apply to LLPs, modified so that they read as follows—