Name games

I read your article on limited liability partnerships (LLPs) with interest and no little surprise (see [2001] Gazette, 12 April, 3).If a firm knows it wishes to transfer to LLP status within a short time, all well and good.

However, if it is merely thinking about it, and is registering simply to reserve the name it wants, it may be in danger of shooting itself in the foot.The problem is that, under section 12 of the Limited Liability Partnerships Act 2000, the exemption from the charge to stamp duty on the transfer of any assets from the partnership or its nominees into the name of the LLP is only available for a period of one year from incorporation.

That period of grace is intended to allow for the processes of transfer, especially the obtaining of third party consents from, for example, mortgagees and /or landlords.If a firm incorporates, and only later thinks about transferring, it could find that, by the time it makes its mind up and gets any necessary consents, it is outside the year, and will get caught for the full ad valorem duty.It might be better, if reserving the name is a real concern, to form Smith & Bloggs Limited as an interim measure, since that will prevent anyone registering Smith & Bloggs LLP.

Then, when ready for the transfer, change the name of the limited company and register the LLP with the desired name.

Otherwise, prudence could have a substantial cost.Simon Young, Veitch Penny, Exeter