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Understanding limited liability partnerships in the small and medium sized business sector

Funded by: Institute of Chartered Accountants in England and Wales (ICAEW)

Led by: Dr Denise Fletcher (Sheffield University Management School)

Open University Business School contact: Professor Jane Frecknall-Hughes

Background

The project will be concerned with examining the prevalence and effectiveness of the legal form of the Limited Liability Partnership (LLP) since its introduction in the UK by the Limited Liability Partnership Act 2000, with particular reference to the small and medium sized enterprise (SME) sector. This proposal aligns with the aspirations of two areas of the ICAEW’s 'Thought Leadership' activities. The first area is 'Market Foundations' and its concern with 'whether the rights and obligations of some types of legal entity are more effective than others'. The second area is 'Inspiring Confidence in Financial Services' whereby having a better understanding of the adoption and functioning of LLPs can help the accountancy profession to develop practices which are more responsive to the needs of LLPs.

Aims and objectives

To undertake an analysis of the distribution and sectoral breakdown of LLPs in the UK; to ascertain the extent to which firms have converted to the LLP form or not; to explain the growth in number of LLPs registered; to identify the factors which are, or should be, relevant to new and existing SMEs in deciding which is the most appropriate form to adopt; to identify the factors underlying decisions to adopt or not adopt the LLP form; to assess whether the LLP form has encouraged greater economic activity/likelihood of starting a business; to classify the characteristics of LLP SMEs and types of LLPs within the SME sector; to evaluate the tax benefits and tax incentives associated with setting up an LLP; and to assess the accountancy and advisory needs of LLPs.

Methods

The project will involve detailed analysis of LLPs as identified on the FAME database, interviews (by telephone and in person), and a postal questionnaire survey, and will be undertaken in a series of stages.

Research team

Research centre: Innovation in Teaching and Learning (InTEL)