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2014.04.08 - Scotland: requirements for financial statements and filing of tax returns for Scotland Limited Partnerships


Limited Partnerships in Scotland (Scotland L.P.) are very popular amongst entrepreneurs. The Limited Partnership is a reliable instrument that is often used in international business.

Considering the many questions asked by clients regarding preparation of financial statements and regarding relations of Scottish partnerships with HMRC (Her Majesty Revenue and Customs), we are able to provide detailed information on such matters below.

  1. Operations of Scottish Limited Partnerships are regulated by the UK Limited Partnerships Act 1907, as well as the Partnerships (Accounting) Regulations 2008 and The Companies and Partnerships (Accounts and Audit) Regulations 2013.
  2. In accordance with Partnerships (Accounting) Regulations 2008, the Limited Partnership is treated as a Qualifying Partnership where the members are legal entities or companies.
  3. Where the Limited Partnership is treated as a Qualifying Partnership, it is subject to Part 15 (Accounts and Reports) of the standard United Kingdom corporate legislation being the UK Companies Act 2006. Please see the quotation below:


    3.—(1) A partnership which is formed under the law of any part of the United Kingdom is a qualifying partnership for the purposes of these Regulations if each of its members, and is—
    (a)a limited company, or
    (b)an unlimited company, or a Scottish partnership, each of whose members is a limited company.
    Preparation of accounts of qualifying partnerships
    4.—(1) Subject to regulation 7, the persons who are members of a qualifying partnership at the end of any financial year of the partnership must, in respect of that year—
    (a)prepare the like annual accounts and directors’ report, and
    (b)cause to be prepared such an auditor’s report,
    as would be required, if the partnership were a company, under Part 15 (accounts and reports) and Chapter 1 of Part 16 (requirement for audited accounts) of the Companies Act 2006, and under the Small Companies Accounts Regulations or the Large and Medium-sized Companies Accounts Regulations (as the case may be).

    A Scottish Limited Partnership founded by legal entities is therefore subject to the requirements for preparing of financial statements in a similar manner to any standard British Limited Company.

  4. The UK Companies Act 2006 also contains strict provisions regarding duties to keep accounting records as well as the preparation of financial statements.

    In accordance with section 387 of UK Companies Act 2006 which is quoted below, officers of the company infringing provisions regarding accounting records and financial statements may be liable to not only administrative but also to criminal punishment carrying penalties of imprisonment for up to two years.

    387     Duty to keep accounting records: offence

    A person guilty of an offence under this section is liable - on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both); 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).

    This means that the fact that the UK Companies House does not provide public registration of financial statements for Scottish Limited Partnerships does not release such companies and their officers from compliance with the uniform United Kingdom statutory requirements.

  5. Furthermore Companies House is not the only institution that partnerships in Scotland deal with. The United Kingdom tax authority being Her Majesty Revenue & Customs does not provide any exceptions for Scottish Limited Partnerships and requires that the Scottish Limited Partnership must file tax returns in a manner similar to any other company incorporated in the United Kingdom.


When considering the matter of financial statements, it is important to note that banks, even if providing services to clients from the jurisdictions where there is no requirement to file financial statements with the official institutions or where currently the law does not stipulate for preparation of financial statements such as in offshore jurisdictions, increasingly prefer to cooperate with clients who prepare financial statements and are ready to submit them to the bank at its first request.

The likely forecast is that more banks will act similarly in the future, so companies of practically all jurisdictions should be prepared for the requirement to draw up financial statements. In the first instance, they must keep their accounting records in proper order.

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