HC Deb 09 June 2000 vol 351 cc385-6W
Mr. Mitchell

To ask the Secretary of State for Trade and Industry what estimate he has made of the number of plcs likely to register as limited liability partnerships under his proposed new legislation. [124381]

Dr. Howells

No such estimate has been made. For a number of reasons we would be surprised if plcs converted to LLPs. There are no shareholders in an LLP, and no provision for the public listing of an LLP. Shareholders in a plc would have to become LLP members, and would be subject to, for example, the potential "clawback" liability of the new section 214A to be contained in regulations applying the Insolvency Act 1986. Treating LLPs as partnerships for tax will mean that each member will be taxed on their proportionate share of the whole of the LLP's income and capital gains. This would make both the LLP's and the members' tax calculations extremely complicated, with the individual members having to pay that tax through self assessment. Further, if an LLP restricted what the members could draw out because it wanted to retain profit for working capital then taxing each member on their proportionate share of the whole of tin LLP's profit could mean they paid more tax than they had received. This would give the appearance that they were suffering an effective tax rate of over 100 per cent.

Mr. Mitchell

To ask the Secretary of State for Trade and Industry when the consultation on the good faith provisions of the Limited Liability Partnerships Bill will be completed. [125346]

Dr. Howells

The consultation paper, "Regulatory Default Provisions Governing Relationship Between Members" (URN 00/617) published in February, sought comments on whether it was appropriate to include express statutory provision that members of an LLP owe a duty of good faith to each other. The consultation period closed on 7 April, and the summary of responses (URN 00/865) published in May set out the conclusions reached.

Mr. Mitchell

To ask the Secretary of State for Trade and Industry what consultation he had with the Federation of Small Businesses about the opportunities for small businesses to become limited liability partnerships before the Limited Liability Partnerships Bill was introduced. [125345]

Dr. Howells

A representative of the Federation of Small Businesses met my officials in October 1999 and has also been in correspondence with them.