New proposals to apply a ‘strike off’ procedure to agricultural limited partnerships who do not comply with annual confirmation statement requirements has been criticised by the National Farmers’ Union (NFU) Scotland.

The new proposals are part of the UK Government’s commitment to reforming the regulatory requirements of limited partnerships and preventing their misuse.

This week marks the first anniversary of the introduction of regulations designed to improve the transparency of those who own and control UK companies.

The changes made by the UK Government introduced a new requirement for the filing of an annual return to Companies House.

The union is concerned that there is a lack of understanding within the industry about the new requirements and the potential penalties for non-compliance with these.

Limited partnerships are commonly used within the agricultural industry in Scotland, due to their tax-efficient nature.

However, prior to 2003, they were also used as a tenancy option, and there are around 500 such agreements still in operation.

Such tenancies were traditionally used to avoid granting full ‘secure’ tenancies.

The landlord (limited partner) entered into a limited partnership with the tenant (general partner) and then granted a lease to the limited partnership.

As such, limited liability was granted to the landlord, with the tenant being liable for the debts and obligations of the limited partnership.

Striking off

A year on from the previous changes, the UK Government is consulting on new proposals that will provide the registrar with powers to strike off limited partnerships who fail to comply with the reporting requirements.

In response to the recent consultation, NFU Scotland has reiterated that it does not believe, and has seen no evidence to suggest that agricultural limited partnerships have been used as vehicles for any form of criminality.


NFU Scotland’s legal and technical policy manager, Gemma Cooper said: “Limited partnerships have operated with agriculture for some time. They are attractive because of the tax advantages that they provide, as partners are taxed only on the profits arising from the limited partnership.

“The union has concerns regarding the unintended consequences for agricultural tenancies of this proposal.

“More specifically, the proposal for ‘non-operating strike-off’, whereby a limited partnership’s failure to deliver a confirmation statement would lead to the registrars’ belief that the partnership is not in operation.

The consequences of this could be the limited partnership losing limited liability; something we believe could lead to the potential for legal claims and European Convention on Human Rights issues.

“Anecdotally, we know that awareness of the reporting requirement is low. We are urging the UK Government to work with the industry to raise awareness, and to find solutions which do not rely on potentially damaging changes such as this.”