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Limited partnerships are often used as investment vehicles by the venture capital and private equity industries, and are sometimes also used as general investment funds. The commentary outlines the treatment of these limited partnership structures, this is a complex specialist area and more details can be found in Ray: Partnership Taxation, Ch 20.

The attractions of a limited partnership for this purpose include:

1. Ìý

   •ÌýÌýÌýÌý limited liability of investors — investors who are limited partners are only exposed to third party liabilities to the extent of their own investment (in the case of non-private fund limited partnership (PFLP) funds) or the amount of the partnership property which is available to its general partners to meet such debts and obligations (in the case of PFLP funds)¹

2. Ìý

   •ÌýÌýÌýÌý tax transparency which avoids an extra layer of tax on the fund vehicle itself — indeed to ensure this is achieved, it is additionally provided that a limited partnership scheme (defined to mean a limited partnership registered under the Limited Partnership Act 1907 and, so, encompassing