The Small Limited Liability Partnerships (Accounts) 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 .

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

PART 1 — INTRODUCTION

Citation and interpretation

1

• (1) These Regulations may be cited as the Small Limited Liability Partnerships (Accounts) Regulations 2008.

• (2) In these Regulations—

• “the 2006 Act” means the Companies Act 2006 ;

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

• “the Small Companies Accounts Regulations” means the Small Companies and Groups (Accounts and Directors' Report) Regulations 2008 .

• (3) Any reference in these Regulations to a numbered Part or section of the 2006 Act is a reference to that Part or section as applied to LLPs by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 .

Commencement and application

2

• (1) These Regulations come into force on 1st October 2008.

• (2) They apply in relation to financial years beginning on or after 1st October 2008.

• (3) They apply to LLPs which are subject to the small LLPs regime under Part 15 of the 2006 Act (see section 381 of that Act ) provisions of the Small Companies Accounts Regulations, with modifications.

PART 2 — FORM AND CONTENT OF INDIVIDUAL ACCOUNTS

Non-IAS individual accounts

3

• (1) Regulation 3 of the Small Companies Accounts Regulations applies to LLPs, modified so that it reads as follows—

(3) (1) Subject to the following provisions of this regulation and regulation 5A, non-IAS individual accounts under section 396 of the 2006 Act (non-IAS individual accounts) must comply with the provisions of Schedule 1 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 as to the form and content of the balance sheet and profit and loss account, and additional information to be provided by way of notes to the accounts. (1A) Sections C (alternative accounting rules) and D (fair value accounting) in Part 2 of Schedule 1 to these Regulations do not apply to an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B of the 2006 Act) and whose accounts for that year are prepared in accordance with the exemption permitted by— (a) regulation 5A, or (b) paragraph 1(1A) of Section A in Part 1 of Schedule 1 to these Regulations. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) Accounts are treated as having complied with any provision of Schedule 1 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 if they comply instead with the corresponding provision of Schedule 1 to the Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008 .

• (2) The provisions of Schedule 1 to the Small Companies Accounts Regulations apply to LLPs, modified so that they are the provisions set out in Schedule 1 to these Regulations.

Information about related undertakings (non-IAS or IAS individual accounts)

4

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Accounts for delivery to registrar of companies (non-IAS individual accounts)

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 3 — FORM AND CONTENT OF GROUP ACCOUNTS

Non-IAS group accounts

6

• (1) Regulation 8 of the Small Companies Accounts Regulations applies to LLPs, modified so that it reads as follows—

(8) (1) Where the members of a parent LLP which— (a) is subject to the small LLPs regime, and (b) has prepared non-IAS individual accounts in accordance with regulation 3, prepare non-IAS group accounts under section 398 of the 2006 Act (option to prepare group accounts), those accounts must comply with the provisions of ... Schedule 4 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 as to the form and content of the consolidated balance sheet and consolidated profit and loss account, and additional information to be provided by way of notes to the accounts. (2) Accounts are treated as having complied with any provision of ... Schedule 4 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 if they comply instead with the corresponding provision of Schedule 3 to the Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008.

• (2) The provisions of Part 1 of Schedule 6 to the Small Companies Accounts Regulations apply to LLPs, modified so that they are the provisions set out in Part 1 of Schedule 4 to these Regulations.

Information about related undertakings (Non-IAS or IAS group accounts)

7

• (1) Regulation 10 of the Small Companies Accounts Regulations applies to LLPs, modified so that it reads as follows—

(10) (1) Non-IAS or IAS group accounts must comply with the provisions of Part 2 of Schedule 4 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 as to information about related undertakings to be given in notes to the LLP's accounts. (2) Information otherwise required to be given by Part 2 of Schedule 4 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 need not be disclosed with respect to an undertaking that— (a) is established under the law of a country outside the United Kingdom, or (b) carries on business outside the United Kingdom, if the conditions specified in section 409(4) of the 2006 Act are met (see section 409(5) of the 2006 Act for disclosure required where advantage taken of this exemption).

• (2) The provisions of Part 2 of Schedule 6 to the Small Companies Accounts Regulations apply to LLPs, modified so that they are the provisions set out in Part 2 of Schedule 4 to these Regulations.

PART 4 — INTERPRETATION

General interpretation

8

• (1) Regulation 13 of the Small Companies Accounts Regulations applies to LLPs, modified so that it reads as follows—

(13) Schedule 5 to the Small Limited Liability Partnerships (Accounts) Regulations 2008 contains general definitions for the purposes of these Regulations.

• (2) The provisions of Schedule 8 to the Small Companies Accounts Regulations apply to LLPs, modified so that they are the provisions set out in Schedule 5 to these Regulations.

SCHEDULE 1 — NON-IAS INDIVIDUAL ACCOUNTS

PART 1 — GENERAL RULES AND FORMATS

SECTION A — GENERAL RULES

1

• (1) Subject to the following provisions of this Schedule—

• (a) every balance sheet of an LLP must show the items listed in either of the balance sheet formats in Section B of this Part, and

• (b) every profit and loss account must show the items listed in either of the profit and loss account formats in Section B.

• (1A) But, subject to the following provisions of this Schedule, in relation to an LLP which qualifies as a micro-entity in relation to a financial year (see sections 384A and 384B of the 2006 Act)—

• (a) the only items which must be shown on the LLP’s balance sheet for that year are those listed in either of the balance sheet formats in Section C of this Part, and

• (b) the only items which must be shown on the LLP’s profit and loss account for that year are those listed in the profit and loss account format in Section C.

• (2) References in this Schedule to the items listed in any of the formats in Section B and Section C are to those items read together with any of the notes following the formats which apply to those items.

• (3) Subject to paragraph 1A, the items must be shown in the order and under the headings and sub-headings given in the particular format used, but—

• (a) the notes to the formats may permit alternative positions for any particular items, and

• (b) the heading or sub-heading for any item does not have to be distinguished by any letter or number assigned to that item in the format used.

2

• (1) Where in accordance with paragraph 1(1) an LLP's balance sheet or profit and loss account for any financial year has been prepared by reference to one of the formats in Section B, the members of the LLP must use the same format in preparing non-IAS individual accounts for subsequent financial years, unless in their opinion there are special reasons for a change.

• (2) Particulars of any such change must be given in a note to the accounts in which the new format is first used, and the reasons for the change must be explained.

3

• (1) Any item required to be shown in an LLP's balance sheet or profit and loss account may be shown in greater detail than required by the particular format used.

• (2) The balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not otherwise covered by any of the items listed in the format used, save that none of the following may be treated as assets in any balance sheet—

• (a) preliminary expenses,

• (b) expenses of, and commission on, any issue of debentures,

• (c) costs of research.

4

• (1) Where the special nature of the LLP's business requires it, the members of the LLP must adapt the arrangement, headings and sub-headings otherwise required in respect of items given an Arabic number in the balance sheet or profit and loss account format used.

• (2) The members may combine items to which Arabic numbers are given in any of the formats set out in Section B if—

• (a) their individual amounts are not material to assessing the state of affairs or profit or loss of the LLP for the financial year in question, or

• (b) the combination facilitates that assessment.

• (3) Where sub-paragraph (2)(b) applies, the individual amounts of any items which have been combined must be disclosed in a note to the accounts.

5

• (1) Subject to sub-paragraph (2), the members must not include a heading or sub-heading corresponding to an item in the balance sheet or profit and loss account format used if there is no amount to be shown for that item for the financial year to which the balance sheet or profit and loss account relates.

• (2) Where an amount can be shown for the item in question for the immediately preceding financial year that amount must be shown under the heading or sub-heading required by the format for that item.

6

Every profit and loss account other than one prepared by reference to the format in Section C must show the amount of an LLP's profit or loss ...before taxation.

7

• (1) For every item shown in the balance sheet or profit and loss account the corresponding amount for the immediately preceding financial year must also be shown.

• (2) Where that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount may be adjusted, and particulars of the non-comparability and of any adjustment must be disclosed in a note to the accounts.

8

Amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be), or vice versa.

9

The members of the LLP must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.

SECTION B — THE REQUIRED FORMATS FOR THE ACCOUNTS OF LLPS OTHER THAN MICRO-ENTITIES

Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats
Format 1	Format 1	Format 1	Format 1	Format 1	Format 1
A.	Fixed assets	Fixed assets	Fixed assets	Fixed assets	Fixed assets
		I.	Intangible assets	Intangible assets	Intangible assets
				1.	Goodwill (1)
				2.	Other intangible assets (2)
		II.	Tangible assets	Tangible assets	Tangible assets
				1.	Land and buildings
				2.	Plant and machinery etc.
		III.	Investments	Investments	Investments
				1.	Shares in group undertakings and participating interests
				2.	Loans to group undertakings and undertakings in which the LLP has a participating interest
				3.	Other investments other than loans
				4.	Other investments
B.	Current assets	Current assets	Current assets	Current assets	Current assets
		I.	Stocks	Stocks	Stocks
				1.	Stocks
				2.	Payments on account
		II.	Debtors (3)	Debtors (3)	Debtors (3)
				1.	Trade debtors
				2.	Amounts owed by group undertakings and undertakings in which the LLP has a participating interest
				3.	Other debtors
		III.	Investments	Investments	Investments
				1.	Shares in group undertakings
				2.	Other investments
		IV.	Cash at bank and in hand	Cash at bank and in hand	Cash at bank and in hand
C.	Prepayments and accrued income (4)	Prepayments and accrued income (4)	Prepayments and accrued income (4)	Prepayments and accrued income (4)	Prepayments and accrued income (4)
D.	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year	Creditors: amounts falling due within one year
				1.	Bank loans and overdrafts
				2.	Trade creditors
				3.	Amounts owed to group undertakings and undertakings in which the LLP has a participating interest
				4.	Other creditors (5)
E.	Net current assets (liabilities) (6)	Net current assets (liabilities) (6)	Net current assets (liabilities) (6)	Net current assets (liabilities) (6)	Net current assets (liabilities) (6)
F.	Total assets less current liabilities	Total assets less current liabilities	Total assets less current liabilities	Total assets less current liabilities	Total assets less current liabilities
G.	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year	Creditors: amounts falling due after more than one year
				1.	Bank loans and overdrafts
				2.	Trade creditors
				3.	Amounts owed to group undertakings and undertakings in which the LLP has a participating interest
				4.	Other creditors (5)
H.	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities
I.	Accruals and deferred income (5)	Accruals and deferred income (5)	Accruals and deferred income (5)	Accruals and deferred income (5)	Accruals and deferred income (5)
J.	Loans and other debts due to members (7)	Loans and other debts due to members (7)	Loans and other debts due to members (7)	Loans and other debts due to members (7)	Loans and other debts due to members (7)
K.	Members' other interests	Members' other interests	Members' other interests	Members' other interests	Members' other interests
		I.	Members' capital	Members' capital	Members' capital
		II.	Revaluation reserve	Revaluation reserve	Revaluation reserve
		III.	Other reserves	Other reserves	Other reserves
Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats	Balance sheet formats
---	---	---	---	---	---
Format 2	Format 2	Format 2	Format 2	Format 2	Format 2
ASSETS	ASSETS	ASSETS	ASSETS	ASSETS	ASSETS
A.	Fixed assets	Fixed assets	Fixed assets	Fixed assets	Fixed assets
		I.	I.	Intangible assets	Intangible assets
					1.
					2.
		II.	II.	Tangible assets	Tangible assets
					1.
					2.
		III.	III.	Investments	Investments
					1.
					2.
					3.
					4.
B.	Current assets	Current assets	Current assets	Current assets	Current assets
		I.	I.	Stocks	Stocks
					1.
					2.
		II.	II.	Debtors (3)	Debtors (3)
					1.
					2.
					3.
		III.	III.	Investments	Investments
					1.
					2.
		IV.	IV.	Cash at bank and in hand	Cash at bank and in hand
C.	Prepayments and accrued income (4)	Prepayments and accrued income (4)	Prepayments and accrued income (4)	Prepayments and accrued income (4)	Prepayments and accrued income (4)
LIABILITIES	LIABILITIES	LIABILITIES	LIABILITIES	LIABILITIES	LIABILITIES
A.	A.	A.	Loans and other debts due to members (7)	Loans and other debts due to members (7)	Loans and other debts due to members (7)
B.	B.	B.	Members' other interests	Members' other interests	Members' other interests
		I.	I.	Members' capital (7)	Members' capital (7)
		II.	II.	Revaluation reserve	Revaluation reserve
		III.	III.	Other reserves	Other reserves
C.	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities	Provisions for liabilities
D.	Creditors (8)	Creditors (8)	Creditors (8)	Creditors (8)	Creditors (8)
					1.
					2.
					3.
					4.
E.	Accruals and deferred income (5)	Accruals and deferred income (5)	Accruals and deferred income (5)	Accruals and deferred income (5)	Accruals and deferred income (5)

Notes on the balance sheet formats

(1)	Goodwill

(Formats 1 and 2, item A.I.1.)

Amounts representing goodwill must only be included to the extent that the goodwill was acquired for valuable consideration.

(2)	Other intangible assets

(Formats 1 and 2, item A.I.2.)

Amounts in respect of concessions, patents, licences, trade marks and similar rights and assets must only be included in an LLP’s balance sheet under this item if either—

• (a) the assets were acquired for valuable consideration and are not required to be shown under goodwill, or

• (b) the assets in question were created by the LLP itself.

(3)	Debtors

(Formats 1 and 2, items B.II.1 to 3.)

The amount falling due after more than one year must be shown separately for each item included under debtors unless the aggregate amount of debtors falling due after more than one year is disclosed in the notes to the accounts.

(4)	Prepayments and accrued income

(Formats 1 and 2, item C.)

This item may alternatively be included under item B.II.3 in Format 1 or 2.

(5)	Other creditors

(Format 1, items D.4, G.4 and I and Format 2, items D.4 and E.)

There must be shown separately—

• (a) the amount of any convertible loans, and

• (b) the amount for creditors in respect of taxation and social security.

Payments received on account of orders must be included in so far as they are not shown as deductions from stocks.

In Format 1, accruals and deferred income may be shown under item I or included under item D.4 or G.4, or both (as the case may require). In Format 2, accruals and deferred income may be shown under item E or within item D.4 under Liabilities.

(6)	Net current assets (liabilities)

(Format 1, item E.)

In determining the amount to be shown under this item any prepayments and accrued income must be taken into account wherever shown.

(7)	Loans and other debts due to members

(Format 1, item J and Format 2, Liabilities item A)

The following amounts must be shown separately under this item—

• (a) the aggregate amount of money advanced to the LLP by the members by way of loan,

• (b) the aggregate amount of money owed to members by the LLP in respect of profits,

• (c) any other amounts.

(8)	Creditors

(Format 2, Liabilities items D.1 to 4.)

Amounts falling due within one year and after one year must be shown separately for each of these items and for the aggregate of all of these items unless the aggregate amount of creditors falling due within one year and the aggregate amount of creditors falling due after more than one year is disclosed in the notes to the accounts.

Profit and loss account formats	Profit and loss account formats	Profit and loss account formats
Format 1	Format 1	Format 1
(see note (12) below)	(see note (12) below)	(see note (12) below)
	1.	Turnover
	2.	Cost of sales (9)
	3.	Gross profit or loss
	4.	Distribution costs (9)
	5.	Administrative expenses (9)
	6.	Other operating income
	7.	Income from shares in group undertakings
	8.	Income from participating interests
	9.	Income from other fixed asset investments (10)
	10.	Other interest receivable and similar income (10)
	11.	Amounts written off investments
	12.	Interest payable and similar charges (11)
	13.	Tax on profit or loss on ordinary activities
	14.	Profit or loss on ordinary activities after taxation
	15.	Extraordinary income
	16.	Extraordinary charges
	17.	Extraordinary profit or loss
	18.	Tax on extraordinary profit or loss
	19.	Other taxes not shown under the above items
	20.	Profit or loss for the financial year before members’ remuneration and profit shares
Profit and loss account formats	Profit and loss account formats	Profit and loss account formats
---	---	---
Format 2	Format 2	Format 2
	1.	Turnover
	2.	Change in stocks of finished goods and in work in progress
	3.	Own work capitalised
	4.	Other operating income
	5.	(a)
		(b)
	6.	Staff costs
		(a)
		(b)
		(c)
	7.	(a)
		(b)
	8.	Other operating charges
	9.	Income from shares in group undertakings
	10.	Income from participating interests
	11.	Income from other fixed asset investments (10)
	12.	Other interest receivable and similar income (10)
	13.	Amounts written off investments
	14.	Interest payable and similar charges (11)
	15.	Tax on profit or loss on ordinary activities
	16.	Profit or loss on ordinary activities after taxation
	17.	Extraordinary income
	18.	Extraordinary charges
	19.	Extraordinary profit or loss
	20.	Tax on extraordinary profit or loss
	21.	Other taxes not shown under the above items
	22.	Profit or loss for the financial year before members’ remuneration and profit shares

Notes on the profit and loss account formats

(9)	Cost of sales: distribution costs: administrative expenses

(Format 1, items 2, 4 and 5.)

These items must be stated after taking into account any necessary provisions for depreciation or diminution in value of assets.

(10)	Income from other fixed asset investments: other interest receivable and similar income

(Format 1, items 9 and 10; Format 2, items 11 and 12.)

Income and interest derived from group undertakings must be shown separately from income and interest derived from other sources. Interest receivable from members must not be included under this item.

(11)	Interest payable and similar charges

(Format 1, item 12; Format 2, item 14.)

The amount payable to group undertakings must be shown separately. Interest payable to members must not be included under this item.

(12)	Format 1

The amount of any provisions for depreciation and diminution in value of tangible and intangible fixed assets falling to be shown under item 7(a) in Format 2 must be disclosed in a note to the accounts in any case where the profit and loss account is prepared using Format 1.

PART 2 — ACCOUNTING PRINCIPLES AND RULES

SECTION A — ACCOUNTING PRINCIPLES

Preliminary

10

• (1) The amounts to be included in respect of all items shown in an LLP's accounts must be determined in accordance with the principles set out in this Section.

• (2) But if it appears to the members of the LLP that there are special reasons for departing from any of those principles in preparing the LLP's accounts in respect of any financial year they may do so, in which case particulars of the departure, the reasons for it and its effect must be given in a note to the accounts.

Accounting principles

11

The LLP is presumed to be carrying on business as a going concern.

12

Accounting policies and measurement bases must be applied consistently within the same accounts and from one financial year to the next.

13

The amount of any item must be determined on a prudent basis, and in particular—

• (a) only profits realised at the balance sheet date must be included in the profit and loss account, ...

• (b) all liabilities which have arisen in respect of the financial year to which the accounts relate or a previous financial year must be taken into account, including those which only become apparent between the balance sheet date and the date on which it is signed on behalf of the members in accordance with section 414 of the 2006 Act (approval and signing of accounts).

• (c) all provisions for diminution of value must be recognised, whether the result of the financial year is a profit or a loss,

• (d) at the balance sheet date, a provision must represent the best estimate of the expenses likely to be incurred or, in the case of a liability, of the amount required to meet that liability, and

• (e) provisions must not be used to adjust the values of assets.

14

All income and charges relating to the financial year to which the accounts relate must be taken into account, without regard to the date of receipt or payment.

15

In determining the aggregate amount of any item, the amount of each individual asset or liability that falls to be taken into account must be determined separately.

SECTION B — HISTORICAL COST ACCOUNTING RULES

Preliminary

16

Subject to Sections C and D of this Part of this Schedule, the amounts to be included in respect of all items shown in an LLP's accounts must be determined in accordance with the rules set out in this Section.

Fixed assets

General rules

17

• (1) The amount to be included in respect of any fixed asset must be its purchase price or production cost.

• (2) This is subject to any provision for depreciation or diminution in value made in accordance with paragraphs 18 to 20.

Rules for depreciation and diminution in value

18

In the case of any fixed asset which has a limited useful economic life, the amount of—

• (a) its purchase price or production cost, or

• (b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its purchase price or production cost less that estimated residual value,

must be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset's useful economic life.

19

• (1) Where a fixed asset investment of a description falling to be included under item A.III of either of the balance sheet formats set out in Section B of Part 1 of this Schedule has diminished in value, provisions for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly.

• (2) Provisions for diminution in value must be made in respect of any fixed asset which has diminished in value if the reduction in its value is expected to be permanent (whether its useful economic life is limited or not), and the amount to be included in respect of it must be reduced accordingly.

• (3) Provisions made under sub-paragraph (1) or (2) must be charged to the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account.

20

• (1) Where the reasons for which any provision was made in accordance with paragraph 19 have ceased to apply to any extent, that provision must be written back to the extent that it is no longer necessary.

• (1A) But provision made in accordance with paragraph 19(2) in respect of goodwill must not be written back to any extent.

• (2) Any amounts written back under sub-paragraph (1) must be recognised in the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account.

Development costs

21

• (1) Where this is in accordance with generally accepted accounting principles or practice, development costs may be included in “other intangible assets” under “fixed assets” in the balance sheet formats set out in Section B of Part 1 of this Schedule.

• (2) If any amount is included in an LLP’s balance sheet in respect of development costs, the note on accounting policies (see paragraph 44 of this Schedule) must include the following information—

• (a) the period over which the amount of those costs originally capitalised is being or is to be written off, and

• (b) the reasons for capitalising the development costs in question.

Goodwill

22

• (1) Intangible assets must be written off over the useful economic life of the intangible asset.

• (2) Where in exceptional cases the useful life of intangible assets cannot be reliably estimated, such assets must be written off over a period chosen by the members of the LLP.

• (3) The period referred to in sub-paragraph (2) must not exceed ten years.

• (4) There must be disclosed in a note to the accounts the period referred to in sub-paragraph (2) and the reasons for choosing that period.

Current assets

23

Subject to paragraph 24, the amount to be included in respect of any current asset must be its purchase price or production cost.

24

• (1) If the net realisable value of any current asset is lower than its purchase price or production cost, the amount to be included in respect of that asset must be the net realisable value.

• (2) Where the reasons for which any provision for diminution in value was made in accordance with sub-paragraph (1) have ceased to apply to any extent, that provision must be written back to the extent that it is no longer necessary.

Miscellaneous and supplementary provisions

Excess of money owed over value received as an asset item

25

• (1) Where the amount repayable on any debt owed by an LLP is greater than the value of the consideration received in the transaction giving rise to the debt, the amount of the difference may be treated as an asset.

• (2) Where any such amount is so treated—

• (a) it must be written off by reasonable amounts each year and must be completely written off before repayment of the debt, and

• (b) if the current amount is not shown as a separate item in the LLP's balance sheet, it must be disclosed in a note to the accounts.

Assets included at a fixed amount

26

• (1) Subject to sub-paragraph (2), the following may be included at a fixed quantity and value in the balance sheet formats set out in Section B of Part 1 of this Schedule—

• (a) assets which fall to be included amongst the fixed assets of an LLP under the item “intangible assets”, and

• (b) raw materials and consumables within the item “stocks”.

• (2) Sub-paragraph (1) applies to assets of a kind which are constantly being replaced where—

• (a) their overall value is not material to assessing the LLP's state of affairs, and

• (b) their quantity, value and composition are not subject to material variation.

Determination of purchase price or production cost

27

• (1) The purchase price of an asset is to be determined by adding to the actual price paid any expenses incidental to its acquisition and then subtracting any incidental reductions in the cost of acquisition.

• (2) The production cost of an asset is to be determined by adding to the purchase price of the raw materials and consumables used the amount of the costs incurred by the LLP which are directly attributable to the production of that asset.

• (3) In addition, there may be included in the production cost of an asset—

• (a) a reasonable proportion of the costs incurred by the LLP which are only indirectly attributable to the production of that asset, but only to the extent that they relate to the period of production, and

• (b) interest on capital borrowed to finance the production of that asset, to the extent that it accrues in respect of the period of production,

provided, however, in a case within paragraph (b), that the inclusion of the interest in determining the cost of that asset and the amount of the interest so included is disclosed in a note to the accounts.

• (4) In the case of current assets distribution costs may not be included in production costs.

28

• (1) The purchase price or production cost of—

• (a) any assets which , by virtue of regulation 3(1) and Section B of Part 1 of this Schedule, fall to be included under any item shown in an LLP's balance sheet under the general item “stocks”, and

• (b) any assets which are fungible assets (including investments),

may be determined by the application of any of the methods mentioned in sub-paragraph (2) in relation to any such assets of the same class, provided that the method chosen is one which appears to the members to be appropriate in the circumstances of the LLP.

• (2) Those methods are—

• (a) the method known as “first in, first out” (FIFO),

• (b) the method known as “last in, first out” (LIFO),

• (c) a weighted average price, and

• (d) any other method reflecting generally accepted best practice.

• (3) For the purposes of this paragraph, assets of any description must be regarded as fungible if assets of that description are substantially indistinguishable one from another.

Substitution of original stated amount where price or cost unknown

29

• (1) This paragraph applies where—

• (a) there is no record of the purchase price or production cost of any asset of an LLP or of any price, expenses or costs relevant for determining its purchase price or production cost in accordance with paragraph 27, or

• (b) any such record cannot be obtained without unreasonable expense or delay.

• (2) In such a case, the purchase price or production cost of the asset must be taken, for the purposes of paragraphs 17 to 24, to be the value ascribed to it in the earliest available record of its value made on or after its acquisition or production by the LLP.

SECTION C — ALTERNATIVE ACCOUNTING RULES

Preliminary

30

• (1) The rules set out in Section B are referred to below in this Schedule as the historical cost accounting rules.

• (2) Those rules, with the omission of paragraphs 16, 22 and 26 to 29, are referred to below in this Part of this Schedule as the depreciation rules; and references below in this Schedule to the historical cost accounting rules do not include the depreciation rules as they apply by virtue of paragraph 33.

31

Subject to paragraphs 33 to 35, the amounts to be included in respect of assets of any description mentioned in paragraph 32 may be determined on any basis so mentioned.

Alternative accounting rules

32

• (1) Intangible fixed assets, other than goodwill, may be included at their current cost.

• (2) Tangible fixed assets may be included at a market value determined as at the date of their last valuation or at their current cost.

• (3) Investments of any description falling to be included under item A III of either of the balance sheet formats set out Part 1 of this Schedule may be included either—

• (a) at a market value determined as at the date of their last valuation, or

• (b) at a value determined on any basis which appears to the members to be appropriate in the circumstances of the LLP.

But in the latter case particulars of the method of valuation adopted and of the reasons for adopting it must be disclosed in a note to the accounts.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of the depreciation rules

33

• (1) Where the value of any asset of an LLP is determined on any basis mentioned in paragraph 32, that value must be, or (as the case may require) be the starting point for determining, the amount to be included in respect of that asset in the LLP's accounts, instead of its purchase price or production cost or any value previously so determined for that asset. The depreciation rules apply accordingly in relation to any such asset with the substitution for any reference to its purchase price or production cost of a reference to the value most recently determined for that asset on any basis mentioned in paragraph 32.

• (2) The amount of any provision for depreciation required in the case of any fixed asset by paragraphs 18 to 20 as they apply by virtue of sub-paragraph (1) is referred to below in this paragraph as the adjusted amount, and the amount of any provision which would be required by any of those paragraphs in the case of that asset according to the historical cost accounting rules is referred to as the historical cost amount.

• (3) Where sub-paragraph (1) applies in the case of any fixed asset the amount of any provision for depreciation in respect of that asset—

• (a) included in any item shown in the profit and loss account in respect of amounts written off assets of the description in question, or

• (b) taken into account in stating any item so shown which is required by note (9) of the notes on the profit and loss account formats set out in Part 1 of this Schedule to be stated after taking into account any necessary provision for depreciation or diminution in value of assets included under it,

may be the historical cost amount instead of the adjusted amount, provided that the amount of any difference between the two is shown separately in the profit and loss account or in a note to the accounts.

Additional information to be provided in case of departure from historical cost accounting rules

34

• (1) This paragraph applies where the amounts to be included in respect of assets covered by any items shown in an LLP's accounts have been determined on any basis mentioned in paragraph 32.

• (2) The items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item must be disclosed in the note on accounting policies (see paragraph 44 of this Schedule).

• (3) In the case of each balance sheet item affected, the comparable amounts determined according to the historical cost accounting rules must be shown in a note to the accounts.

• (4) In sub-paragraph (3), references in relation to any item to the comparable amounts determined as there mentioned are references to—

• (a) the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules, and

• (b) the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

Revaluation reserve

35

• (1) With respect to any determination of the value of an asset of an LLP on any basis mentioned in paragraph 32, the amount of any profit or loss arising from that determination (after allowing, where appropriate, for any provisions for depreciation or diminution in value made otherwise than by reference to the value so determined and any adjustments of any such provisions made in the light of that determination) must be credited or (as the case may be) debited to a separate reserve (“the revaluation reserve”).

• (2) The amount of the revaluation reserve under “Members’ other interests” must be shown in the LLP's balance sheet under a separate sub-heading in the position given for the item “revaluation reserve” in Format 1 or 2 of the balance sheet formats set out in Part 1 of this Schedule....

• (3) The treatment for taxation purposes of amounts credited or debited to the revaluation reserve must be disclosed in a note to the accounts.

SECTION D — FAIR VALUE ACCOUNTING

Inclusion of financial instruments at fair value

36

• (1) Subject to sub-paragraphs (2) to (5), financial instruments (including derivatives) may be included at fair value.

• (2) Sub-paragraph (1) does not apply to financial instruments that constitute liabilities unless—

• (a) they are held as part of a trading portfolio,

• (b) they are derivatives, or

• (c) they are financial instruments falling within sub-paragraph (4).

• (3) Unless they are financial instruments falling within sub-paragraph (4), sub-paragraph (1) does not apply to—

• (a) financial instruments (other than derivatives) held to maturity,

• (b) loans and receivables originated by the LLP and not held for trading purposes,

• (c) interests in subsidiary undertakings, associated undertakings and joint ventures,

• (d) equity instruments issued by the LLP,

• (e) contracts for contingent consideration in a business combination, or

• (f) other financial instruments with such special characteristics that the instruments, according to generally accepted accounting principles or practice, should be accounted for differently from other financial instruments.

• (4) Financial instruments which under UK-adopted international accounting standards may be included in accounts at fair value, may be so included, provided that the disclosures required by such accounting standards are made.

• (5) If the fair value of a financial instrument cannot be determined reliably in accordance with paragraph 37, sub-paragraph (1) does not apply to that financial instrument.

• (6) In this paragraph—

• “associated undertaking” has the meaning given by paragraph 19 of Schedule 4 to these Regulations;

• “joint venture” has the meaning given by paragraph 18 of that Schedule.

Determination of fair value

37

• (1) The fair value of a financial instrument is its value determined in accordance with this paragraph.

• (2) If a reliable market can readily be identified for the financial instrument, its fair value is to be determined by reference to its market value.

• (3) If a reliable market cannot readily be identified for the financial instrument but can be identified for its components or for a similar instrument, its fair value is determined by reference to the market value of its components or of the similar instrument.

• (4) If neither sub-paragraph (2) nor (3) applies, the fair value of the financial instrument is a value resulting from generally accepted valuation models and techniques.

• (5) Any valuation models and techniques used for the purposes of sub-paragraph (4) must ensure a reasonable approximation of the market value.

Hedged items

38

An LLP may include any assets and liabilities, or identified portions of such assets or liabilities, that qualify as hedged items under a fair value hedge accounting system at the amount required under that system.

Other assets that may be included at fair value

39

• (1) This paragraph applies to—

• (a) stocks,

• (b) investment property, and

• (c) living animals and plants.

• (2) Stocks, investment property, and living animals and plants may be included at fair value, provided that, as the case may be, all such stocks, investment property, and living animals and plants are so included where their fair value can reliably be determined.

• (3) In this paragraph “fair value” means fair value determined in accordance with generally accepted accounting principles or practice.

Accounting for changes in value

40

• (1) This paragraph applies where a financial instrument is valued in accordance with paragraph 36 or 38 or an asset is valued in accordance with paragraph 39.

• (2) Notwithstanding paragraph 13 in this Part of this Schedule, and subject to sub-paragraphs (3) and (4), a change in the value of the financial instrument or of the investment property or living animal or plant must be included in the profit and loss account.

• (3) Where—

• (a) the financial instrument accounted for is a hedging instrument under a hedge accounting system that allows some or all of the change in value not to be shown in the profit and loss account, or

• (b) the change in value relates to an exchange difference arising on a monetary item that forms part of an LLP's net investment in a foreign entity,

the amount of the change in value must be credited to or (as the case may be) debited from a separate reserve (“the fair value reserve”).

• (4) Where the instrument accounted for—

• (a) is an available for sale financial asset, and

• (b) is not a derivative,

the change in value may be credited to or (as the case may be) debited from the fair value reserve.

The fair value reserve

41

• (1) The fair value reserve must be adjusted to the extent that the amounts shown in it are no longer necessary for the purposes of paragraph 40(3) or (4).

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 3 — NOTES TO THE ACCOUNTS

Preliminary

42

• (1) Any information required in the case of an LLP by the following provisions of this Part of this Schedule must be given by way of a note to the accounts.

• (2) These notes must be presented in the order in which, where relevant, the items to which they relate are presented in the balance sheet and in the profit and loss account.

Reserves

43

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disclosure of accounting policies

44

The accounting policies adopted by the LLP in determining the amounts to be included in respect of items shown in the balance sheet and in determining the profit or loss of the LLP must be stated (including such policies with respect to the depreciation and diminution in value of assets).

Information supplementing the balance sheet

45

Paragraphs 47 to 55 require information which either supplements the information given with respect to any particular items shown in the balance sheet or is otherwise relevant to assessing the LLP's state of affairs in the light of the information so given.

Loans and other debts due to members

46

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed assets

47

• (1) In respect of each item which is or would but for paragraph 4(2)(b) be shown under the general item “fixed assets” in the LLP's balance sheet the following information must be given—

• (a) the appropriate amounts in respect of that item as at the date of the beginning of the financial year and as at the balance sheet date respectively,

• (b) the effect on any amount shown in the balance sheet in respect of that item of—

• (i) any revision of the amount in respect of any assets included under that item made during that year on any basis mentioned in paragraph 32,

• (ii) acquisitions during that year of any assets,

• (iii) disposals during that year of any assets, and

• (iv) any transfers of assets of the LLP to and from that item during that year.

• (2) The reference in sub-paragraph (1)(a) to the appropriate amounts in respect of any item as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of assets falling to be included under that item on either of the following bases, that is to say—

• (a) on the basis of purchase price or production cost (determined in accordance with paragraphs 27 and 28), or

• (b) on any basis mentioned in paragraph 32,

(leaving out of account in either case any provisions for depreciation or diminution in value).

• (3) In respect of each item within sub-paragraph (1) there must also be stated—

• (a) the cumulative amount of provisions for depreciation or diminution in value of assets included under that item as at each date mentioned in sub-paragraph (1)(a),

• (b) the amount of any such provisions made in respect of the financial year,

• (c) the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any assets, and

• (d) the amount of any other adjustments made in respect of any such provisions during that year.

48

Where any fixed assets of the LLP (other than listed investments) are included under any item shown in the LLP's balance sheet at an amount determined on any basis mentioned in paragraph 32, the following information must be given—

• (a) the years (so far as they are known to the members) in which the assets were severally valued and the several values, and

• (b) in the case of assets that have been valued during the financial year, the names of the persons who valued them or particulars of their qualifications for doing so and (whichever is stated) the bases of valuation used by them.

Investments

49

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information about fair value of assets and liabilities

50

• (1) This paragraph applies where financial instruments or other assets have been valued in accordance with, as appropriate, paragraph 36, 38 or 39.

• (2) There must be stated—

• (a) the significant assumptions underlying the valuation models and techniques used to determine the fair values,

• (b) for each category of financial instrument or other asset, the fair value of the assets in that category and the changes in value—

• (i) included directly in the profit and loss account, or

• (ii) credited to or (as the case may be) debited from the fair value reserve,

in respect of those assets, and

• (c) for each class of derivatives, the extent and nature of the instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows.

• (3) Where any amount is transferred to or from the fair value reserve during the financial year, there must be stated in tabular form—

• (a) the amount of the reserve as at the date of the beginning of the financial year and as at the balance sheet date respectively, and

• (b) the amount transferred to or from the reserve during that year.

51

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information where investment property and living animals and plants included at fair value

52

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reserves and provisions

53

• (1) This paragraph applies where fixed assets are measured at revalued amounts.

• (2) Where this paragraph applies, the following information must be given in tabular form—

• (a) movements in the revaluation reserve in the financial year, with an explanation of the tax treatment of items therein, and

• (b) the carrying amount in the balance sheet that would have been recognised had the fixed assets not been revalued.

Details of indebtedness

54

• (1) For the aggregate of all items shown under “creditors” in the LLP's balance sheet there must be stated the aggregate of the following amounts—

• (a) the amount of any debts included under “creditors” which are payable or repayable otherwise than by instalments and fall due for payment or repayment after the end of the period of five years beginning with the day next following the end of the financial year, and

• (b) in the case of any debts so included which are payable or repayable by instalments, the amount of any instalments which fall due for payment after the end of that period.

• (2) In respect of each item shown under “creditors” in the LLP's balance sheet there must be stated the aggregate amount of any debts included under that item in respect of which any security has been given by the LLP with an indication of the nature and form of any such security.

• (3) References above in this paragraph to an item shown under “creditors” in the LLP's balance sheet include references, where amounts falling due to creditors within one year and after more than one year are distinguished in the balance sheet—

• (a) in a case within sub-paragraph (1), to an item shown under the latter of those categories,

• (b) in a case within sub-paragraph (2), to an item shown under either of those categories.

References to items shown under “creditors” include references to items which would but for paragraph 4(2)(b) be shown under that heading.

Guarantees and other financial commitments

55

• (1) The total amount of any financial commitments, guarantees and contingencies that are not included in the balance sheet must be stated.

• (2) An indication of the nature and form of any valuable security given by the LLP in respect of commitments, guarantees and contingencies within sub-paragraph (1) must be given.

• (3) The total amount of any commitments within sub-paragraph (1) concerning pensions must be separately disclosed.

• (4) The total amount of any commitments within sub-paragraph (1) which are undertaken on behalf of or for the benefit of—

• (a) any parent undertaking, fellow subsidiary undertaking or any subsidiary undertaking of the LLP, or

• (b) any undertaking in which the LLP has a participating interest,

must be separately stated and those within paragraph (a) must also be stated separately from those within paragraph (b).

Miscellaneous matters

56

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information supplementing the profit and loss account

57

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Particulars of turnover

58

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous matters

59

• (1) Where any amount relating to any preceding financial year is included in any item in the profit and loss account, the effect must be stated.

• (2) The amount and nature of any individual items of income or expenditure of exceptional size or incidence must be stated.

Sums denominated in foreign currencies

60

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dormant LLPs acting as agents

61

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 2 — INFORMATION ABOUT RELATED UNDERTAKINGS WHERE LLP NOT PREPARING GROUP ACCOUNTS (NON-IAS OR IAS INDIVIDUAL ACCOUNTS)

Subsidiary undertakings

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Holdings in subsidiary undertakings

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial information about subsidiary undertakings

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Significant holdings in undertakings other than subsidiary undertakings

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Parent undertaking drawing up accounts for larger group

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Identification of ultimate parent

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Construction of references to shares held by LLP

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 3 — NON-IAS ABBREVIATED ACCOUNTS FOR DELIVERY TO REGISTRAR OF COMPANIES

PART 1 — THE REQUIRED BALANCE SHEET FORMATS

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 2 — NOTES TO THE ACCOUNTS

Preliminary

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disclosure of accounting policies

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information supplementing the balance sheet

Fixed assets

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial fixed assets

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Details of indebtedness

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sums denominated in foreign currencies

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dormant LLPs acting as agents

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 4 — GROUP ACCOUNTS

PART 1 — FORM AND CONTENT OF NON-IAS GROUP ACCOUNTS

General rules

1

• (1) Subject to the following provisions of this Schedule, group accounts must comply so far as practicable with the provisions of Schedule 1 to these Regulations (non-IAS individual accounts) as if the undertakings included in the consolidation (“the group”) were a single LLP.

• (1A) Paragraph 1A of Schedule 1 to these Regulations does not apply to group accounts.

• (2) For item A.III in each balance sheet format set out in Section B of Part 1 of that Schedule substitute—

A.	III.	Investments	Investments	Investments
			1.	Shares in group undertakings
			2.	Interests in associated undertakings
			3.	Other participating interests
			4.	Loans to group undertakings and undertakings in which a participating interest is held
			5.	Other investments other than loans
			6.	Others

• (3) In the profit and loss account formats in Section B of Part 1 of that Schedule replace the items headed “Income from participating interests”, that is—

• (a) in Format 1, item 8, and

• (b) in Format 2, item 10,

by two items: “Income from interests in associated undertakings” and “Income from other participating interests”.

2

• (1) The consolidated balance sheet and profit and loss account must incorporate in full the information contained in the individual accounts of the undertakings included in the consolidation, subject to the adjustments authorised or required by the following provisions of this Schedule and to such other adjustments (if any) as may be appropriate in accordance with generally accepted accounting principles or practice.

• (1A) Group accounts must be drawn up as at the same date as the accounts of the parent LLP.

• (2) If the financial year of a subsidiary undertaking included in the consolidation does not end with that of the parent LLP, the group accounts must be made up—

• (a) from the accounts of the subsidiary undertaking for its financial year last ending before the end of the parent LLP's financial year, provided that year ended no more than three months before that of the parent LLP, or

• (b) from interim accounts prepared by the subsidiary undertaking as at the end of the parent LLP's financial year.

3

• (1) Where assets and liabilities to be included in the group accounts have been valued or otherwise determined by undertakings according to accounting rules differing from those used for the group accounts, the values or amounts must be adjusted so as to accord with the rules used for the group accounts.

• (2) If it appears to the members of the parent LLP that there are special reasons for departing from sub-paragraph (1) they may do so, but particulars of any such departure, the reasons for it and its effect must be given in a note to the accounts.

• (3) The adjustments referred to in this paragraph need not be made if they are not material for the purpose of giving a true and fair view.

4

Any differences of accounting rules as between a parent LLP's individual accounts for a financial year and its group accounts must be disclosed in a note to the latter accounts and the reasons for the difference given.

5

Amounts that in the particular context of any provision of this Schedule are not material may be disregarded for the purposes of that provision.

Elimination of group transactions

6

• (1) Debts and claims between undertakings included in the consolidation, and income and expenditure relating to transactions between such undertakings, must be eliminated in preparing the group accounts.

• (2) Where profits and losses resulting from transactions between undertakings included in the consolidation are included in the book value of assets, they must be eliminated in preparing the group accounts.

• (3) The elimination required by sub-paragraph (2) may be effected in proportion to the group's interest in the shares of the undertakings.

• (4) Sub-paragraphs (1) and (2) need not be complied with if the amounts concerned are not material for the purpose of giving a true and fair view.

Acquisition and merger accounting

7

• (1) The following provisions apply where an undertaking becomes a subsidiary undertaking of the parent LLP.

• (2) That event is referred to in those provisions as an “acquisition”, and references to the “undertaking acquired” are to be construed accordingly.

8

An acquisition must be accounted for by the acquisition method of accounting unless the conditions for accounting for it as a merger are met and the merger method of accounting is adopted.

9

• (1) The acquisition method of accounting is as follows.

• (2) The identifiable assets and liabilities of the undertaking acquired must be included in the consolidated balance sheet at their fair values as at the date of acquisition.

• (3) The income and expenditure of the undertaking acquired must be brought into the group accounts only as from the date of the acquisition.

• (4) There must be set off against the acquisition cost of the interest in the shares of the undertaking held by the parent LLP and its subsidiary undertakings the interest of the parent LLP and its subsidiary undertakings in the adjusted capital and reserves of the undertaking acquired.

• (5) The resulting amount if positive must be treated as goodwill, and if negative as a negative consolidation difference.

• (6) Negative goodwill may be transferred to the consolidated profit and loss account where such a treatment is in accordance with the principles and rules of Part 2 of Schedule 1 to these Regulations.

10

The conditions for accounting for an acquisition as a merger are that adoption of the merger method of accounting accords with generally accepted accounting principles or practice.

11

• (1) Where an LLP adopts the merger method of accounting, it must comply with this paragraph, and with generally accepted accounting principles or practice.

• (2) The assets and liabilities of the undertaking acquired must be brought into the group accounts at the figures at which they stand in the undertaking's accounts, subject to any adjustment authorised or required by this Schedule.

• (3) The income and expenditure of the undertaking acquired must be included in the group accounts for the entire financial year, including the period before the acquisition.

• (4) The group accounts must show corresponding amounts relating to the previous financial year as if the undertaking acquired had been included in the consolidation throughout that year.

12

• (1) Where a group is acquired, paragraphs 9 to 11 apply with the following adaptations.

• (2) References to shares of the undertaking acquired are to be construed as references to shares of the parent undertaking of the group.

• (3) Other references to the undertaking acquired are to be construed as references to the group; and references to the assets and liabilities, income and expenditure and capital and reserves of the undertaking acquired must be construed as references to the assets and liabilities, income and expenditure and capital and reserves of the group after making the set-offs and other adjustments required by this Schedule in the case of group accounts.

13

• (1) The following information with respect to acquisitions taking place in the financial year must be given in a note to the accounts.

• (2) There must be stated—

• (a) the name of the undertaking acquired or, where a group was acquired, the name of the parent undertaking of that group, and

• (b) whether the acquisition has been accounted for by the acquisition or the merger method of accounting;

and in relation to an acquisition which significantly affects the figures shown in the group accounts, the following further information must be given.

• (3) The composition and fair value of the consideration for the acquisition given by the parent LLP and its subsidiary undertakings must be stated.

• (4) Where the acquisition method of accounting has been adopted, the book values immediately prior to the acquisition, and the fair values at the date of acquisition, of each class of assets and liabilities of the undertaking or group acquired must be stated in tabular form, including a statement of the amount of any goodwill or negative consolidation difference arising on the acquisition, together with an explanation of any significant adjustments made.

• (5) In ascertaining for the purposes of sub-paragraph (4) the profit or loss of a group, the book values and fair values of assets and liabilities of a group or the amount of the assets and liabilities of a group, the set-offs and other adjustments required by this Schedule in the case of group accounts must be made.

14

• (1) There must also be stated in a note to the accounts the cumulative amount of goodwill resulting from acquisitions in that and earlier financial years which has been written off otherwise than in the consolidated profit and loss account for that or any earlier financial year.

• (2) That figure must be shown net of any goodwill attributable to subsidiary undertakings or businesses disposed of prior to the balance sheet date.

15

Where during the financial year there has been a disposal of an undertaking or group which significantly affects the figures shown in the group accounts, there must be stated in a note to the accounts—

• (a) the name of that undertaking or, as the case may be, of the parent undertaking of that group, and

• (b) the extent to which the profit or loss shown in the group accounts is attributable to profit or loss of that undertaking or group.

16

The information required by paragraph 13, 14 or 15 need not be disclosed with respect to an undertaking which—

• (a) is established under the law of a country outside the United Kingdom, or

• (b) carries on business outside the United Kingdom,

if in the opinion of the members of the parent LLP the disclosure would be seriously prejudicial to the business of that undertaking or to the business of the parent LLP or any of its subsidiary undertakings and the Secretary of State agrees that the information should not be disclosed.

Minority interests

17

• (1) The formats set out in Section B of Part 1 of Schedule 1 to these Regulations have effect in relation to group accounts with the following additions.

• (2) In the Balance Sheet Formats there must be shown, as a separate item and under the heading “non-controlling interests”, the amount of capital and reserves attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent LLP and its subsidiary undertakings.

• (3) In the Profit and Loss Account Formats there must be shown, as a separate item and under the heading “non-controlling interests”, the amount of any profit or loss attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent LLP and its subsidiary undertakings.

• (4) For the purposes of paragraph 4 of Schedule 1 (power to adapt or combine items)—

• (a) the additional item required by sub-paragraph (2) above is treated as one to which a letter is assigned, and

• (b) the additional item required by sub-paragraph (3) above is treated as one to which an Arabic number is assigned.

Joint ventures

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• (1) Where an undertaking included in the consolidation manages another undertaking jointly with one or more undertakings not included in the consolidation, that other undertaking (“the joint venture”) may, if it is not—

• (a) a body corporate, or

• (b) a subsidiary undertaking of the parent LLP,

be dealt with in the group accounts by the method of proportional consolidation.

• (2) The provisions of this Schedule relating to the preparation of consolidated accounts and sections 402 and 405 of the 2006 Act apply, with any necessary modifications, to proportional consolidation under this paragraph.

• (3) In addition to the disclosure of the average number of employees employed during the financial year (see section 411(7) of the 2006 Act), there must be a separate disclosure in the notes to the accounts of the average number of employees employed by undertakings that are proportionately consolidated.

Associated undertakings

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• (1) An “associated undertaking” means an undertaking in which an undertaking included in the consolidation has a participating interest and over whose operating and financial policy it exercises a significant influence, and which is not—

• (a) a subsidiary undertaking of the parent LLP, or

• (b) a joint venture dealt with in accordance with paragraph 18.

• (2) Where an undertaking holds 20% or more of the voting rights in another undertaking, it is presumed to exercise such an influence over it unless the contrary is shown.

• (3) The voting rights in an undertaking means the rights conferred on shareholders in respect of their shares or, in the case of an undertaking not having a share capital, on members, to vote at general meetings of the undertaking on all, or substantially all, matters.

• (4) The provisions of paragraphs 5 to 11 of Schedule 7 to the 2006 Act (parent and subsidiary undertakings: rights to be taken into account and attribution of rights) apply in determining for the purposes of this paragraph whether an undertaking holds 20% or more of the voting rights in another undertaking.

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• (1) The interest of an undertaking in an associated undertaking, and the amount of profit or loss attributable to such an interest, must be shown by the equity method of accounting (including dealing with any goodwill arising in accordance with paragraphs 17 to 20 and 22 of Schedule 1 to these Regulations).

• (2) Where the associated undertaking is itself a parent undertaking, the net assets and profits or losses to be taken into account are those of the parent and its subsidiary undertakings (after making any consolidation adjustments).

• (3) The equity method of accounting need not be applied if the amounts in question are not material for the purpose of giving a true and fair view.

PART 2 — INFORMATION ABOUT RELATED UNDERTAKINGS WHERE LLP PREPARING GROUP ACCOUNTS (NON-IAS OR IAS GROUP ACCOUNTS)

Introduction and interpretation

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In this Part of this Schedule “the group” means the group consisting of the parent LLP and its subsidiary undertakings.

Subsidiary undertakings

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• (1) The following information must be given with respect to the undertakings that are subsidiary undertakings of the parent LLP at the end of the financial year.

• (2) The name of each undertaking must be stated.

• (3) There must be stated—

• (a) the address of the undertaking’s registered office (whether in or outside the United Kingdom),

• (b) if it is unincorporated, the address of its principal place of business.

• (4) It must also be stated whether the subsidiary undertaking is included in the consolidation and, if it is not, the reasons for excluding it from consolidation must be given.

• (5) It must be stated with respect to each subsidiary undertaking by virtue of which of the conditions specified in section 1162(2) or (4) of the 2006 Act it is a subsidiary undertaking of its immediate parent undertaking. That information need not be given if the relevant condition is that specified in subsection (2)(a) of that section (holding of a majority of the voting rights) and the immediate parent undertaking holds the same proportion of the shares in the undertaking as it holds voting rights.

Holdings in subsidiary undertakings

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• (1) The following information must be given with respect to the shares of a subsidiary undertaking held—

• (a) by the parent LLP, and

• (b) by the group,

and the information under paragraphs (a) and (b) must (if different) be shown separately.

• (2) There must be stated—

• (a) the identity of each class of shares held, and

• (b) the proportion of the nominal value of the shares of that class represented by those shares.

Financial information about subsidiary undertakings not included in the consolidation

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• (1) There must be shown with respect to each subsidiary undertaking not included in the consolidation—

• (a) the aggregate amount of its capital and reserves as at the end of its relevant financial year, and

• (b) its profit or loss for that year.

• (2) That information need not be given if the group's investment in the undertaking is included in the accounts by way of the equity method of valuation or if—