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Limited partnerships are often used as investment vehicles for the acquisition of property. Their advantage is to allow investors with different tax profiles to invest without extra tax charges in the partnership because it is tax transparent. This can be especially tax beneficial when an investor is non-UK resident or exempt from tax for example a pension fund. 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 19A.

Tax schemes have been marketed to landlords to reduce tax through the use of a property investment limited liability partnership alongside a company but HMRC have confirmed in 'Spotlight 63' that these schemes do not work. The scheme purports to involve the following:

1. Ìý

   •ÌýÌýÌýÌý individual landlords set up a company and also an LLP, and transfer their properties to the LLP

2. Ìý

   •ÌýÌýÌýÌý the individuals and the company are the members of the LLP (meaning it has a corporate member)

3. Ìý

   •ÌýÌýÌýÌý the LLP then allocates profits to members