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Taxing liabilities: The issues to manage when closing an LLP

What happens when a LLP’s business comes to an end? ?Colin Ives explores the key issues in managing losses and taxes

20 March 2013

 

In the past couple of years, there have been several limited liability partnership (LLP) failures in the legal profession, ranging from the likes of Dewey & LeBoeuf and Halliwells to some much smaller firms. With the recent demise of Cobbetts, the pressure on law firms from their funders will continue.

In virtually all of these cases, the demise of the firm was a matter that had not been fully anticipated when it had been set up or when its last members’ agreement had been agreed. This is often particularly the case in respect of the tax and funding position of the firm. The impact of these events will be far reaching and affect many firms in future.

Prior to the advent of LLPs, when firms got into difficulties, all partners (being jointly and severally liable for the debts of the firm) would work together to find a so...

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