TRADING: 'obvious unfairness' on financial statements


Leading lawyers have criticised the government's decision not to force overseas limited liability partnerships (LLPs) operating in England and Wales to publish their accounts - branding it 'an obvious unfairness.'



Domestic firms that want to trade with limited liability in the UK have to file accounts to do so, including information on profit margins, expense ratios and how much the top-earning partner is paid.



John Machell, a barrister at Serle Court Chambers in London, chaired the Association of Partnership Practitioners (APP) working party on the government's recent consultation on introducing legislation requiring foreign LLPs to publish results.



He said: 'It is a basic principle in the UK that the price of trading with limited liability is the filing of publicly available accounting information. To allow overseas limited liability vehicles to trade here without having to pay that price creates an obvious unfairness.'



Ronnie Fox, of London firm Fox, said it was 'wrong' that a foreign law firm could obtain accounting information without it being 'on a reciprocal basis'. 'There should be a level playing field... either all should file accounts or none of them should.'



However, Richard Linsell, a partner at national firm Addleshaw Goddard and current chairman of the APP, said the government has 'got it right'.



'The US LLPs... are different and are forms of ordinary partnership. The liability shield is only for innocent partners... they are more exposed,' he said.



Richard Turnor, a partner at magic circle firm Allen & Overy, acknowledged there was an 'uneven playing field' but said it would be too complicated to introduce legislation covering the range of foreign corporate entities.



'If you decide to make US LLPs register are you deciding to make a partnership register... which raises the question where do you stop?' he said.



A spokesman for the Department of Business, Enterprise and Regulatory Reform said the government would keep the possibility of legislating in this area under review.



Anita Rice