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Industry shows concern over limited liability Bill
00:00 11 Nov 1998
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Exclusive by Keren Sall and Carol Millett
The construction industry has raised concerns about the Government's proposals to give firms operating as partnerships the same limited liability status as limited companies.
The Limited Liability Partnership Bill, which went to consultation in September in draft form, will allow 350,000 small- to medium-size firms to reduce the burden of obtaining run-off insurance for personal liability. Many individuals have to take out run-off insurance to cover any claims which might arise after they retire.
Industry responses will be collated next week, and the Bill is set to become an Act at the close of this legislative year.
But the Association of Consulting Engineers (ACE) has written to the Department of Trade and Industry to ask that it reconsiders plans to have a regulatory body to oversee such partnerships.
"It's unnecessary fiddling," said ACE director of professional affairs Brian Woodford. "We are happy with the rest of the Government's proposals on this but are concerned that a regulatory body will lead to excessive regulation.
"We believe the regulation of professionals by institutions and through the Companies Law, which will apply to Limited Liability Partnerships, should be sufficient."
The Bill proposes that in cases of financial collapse the assets of the partnership will be called-in and not the personal assets of the individual. In addition, it will reduce some of the problems with recapitalisation when a partner dies or leaves, because all assets will revert to the company.
The Government also believes that the Act will encourage senior assistants to become partners. A DTI spokeswoman said: "Many senior assistants are reluctant to become partners because of the threat to their personal assets."
Partnerships will however have to disclose their annual accounts but not their private operating arrangements. Their tax status will also be unaffected.
Donald Bishop, chairman of the Construction Industry Council's Liability Taskforce, said: "We strongly welcome the Bill because some construction firms prefer to work to a partnership structure rather than one where decisions are made hierarchically, as in limited companies."
However, he said the CIC's main concern was to ensure that the change in arrangements would be hospitable to construction firms offering multi-disciplinary services. "The Bill in its current form envisages limited liability partnerships comprising of a single profession such as architects or surveyors.
"So construction firms which are of a multi-disciplinary nature would not be able to take advantage of the benefits offered by the Bill.
"It is not unusual to find surveyors, civil engineers and designers working in the same construction outfit nowadays. So we will asking the DTI to make some amendments."
The construction industry has raised concerns about the Government's proposals to give firms operating as partnerships the same limited liability status as limited companies.
The Limited Liability Partnership Bill, which went to consultation in September in draft form, will allow 350,000 small- to medium-size firms to reduce the burden of obtaining run-off insurance for personal liability. Many individuals have to take out run-off insurance to cover any claims which might arise after they retire.
Industry responses will be collated next week, and the Bill is set to become an Act at the close of this legislative year.
But the Association of Consulting Engineers (ACE) has written to the Department of Trade and Industry to ask that it reconsiders plans to have a regulatory body to oversee such partnerships.
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"It's unnecessary fiddling," said ACE director of professional affairs Brian Woodford. "We are happy with the rest of the Government's proposals on this but are concerned that a regulatory body will lead to excessive regulation.
"We believe the regulation of professionals by institutions and through the Companies Law, which will apply to Limited Liability Partnerships, should be sufficient."
The Bill proposes that in cases of financial collapse the assets of the partnership will be called-in and not the personal assets of the individual. In addition, it will reduce some of the problems with recapitalisation when a partner dies or leaves, because all assets will revert to the company.
The Government also believes that the Act will encourage senior assistants to become partners. A DTI spokeswoman said: "Many senior assistants are reluctant to become partners because of the threat to their personal assets."
Partnerships will however have to disclose their annual accounts but not their private operating arrangements. Their tax status will also be unaffected.
Donald Bishop, chairman of the Construction Industry Council's Liability Taskforce, said: "We strongly welcome the Bill because some construction firms prefer to work to a partnership structure rather than one where decisions are made hierarchically, as in limited companies."
However, he said the CIC's main concern was to ensure that the change in arrangements would be hospitable to construction firms offering multi-disciplinary services. "The Bill in its current form envisages limited liability partnerships comprising of a single profession such as architects or surveyors.
"So construction firms which are of a multi-disciplinary nature would not be able to take advantage of the benefits offered by the Bill.
"It is not unusual to find surveyors, civil engineers and designers working in the same construction outfit nowadays. So we will asking the DTI to make some amendments."
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