Scotland is part of the United Kingdom (UK) covering the northern third of Great Britain. It shares a border with England to the south and is otherwise surrounded by the Atlantic Ocean. In addition to the mainland, the country has around 800 islands. It has a population of 5.5 million. Scotland is a leading financial and business center in the world, making it an important international tax planning jurisdiction. The UK has a standard level of taxation, but it does pose the possibility to incorporate and use companies with a 0% tax rate in the form of a Limited Partnership (LP) which is similar in structure to the Limited Liability Partnership (LLP). As long as one doesn’t participate in the management of the LP, the liability of each of the limited partners is capped at the amount of their contribution.
A Scottish LP does not have to pay income tax as long as its members are non-residents of the UK which means the company doesn’t have resident status which allows the legal entity to freely engage in activities outside the UK and submit a short Tax Return each year.
The Scottish LP is privately owned and must contain 2 or more persons or legal entities. LP’s are not treated as separate taxable entities by Her Majesty’s Revenue and Customs (HMRC) and are transparent for UK direct taxation purposes. Partners in the LP’s that are UK tax residents are assessed directly on their portion of gains and therefore not subject to multiple layers of UK taxation. Non UK resident partners will only pay UK tax on UK source income including share profits arising from a trade in the UK. There are no requirements for filing the accounts.