U.S. fund managers that set up operations in the U.K. have historically tended to favor a U.K. limited liability partnership (LLP) as opposed to a U.K. limited company (LTD). In broad terms, the preference for using an LLP was due to the greater commercial and legal flexibility – and reduced U.K. tax burden – offered by the LLP structure. See “Potential Impact on U.S. Hedge Fund Managers of the Reform of the U.K. Tax Regime Relating to Partnerships and Limited Liability Partnerships” (Mar. 13, 2014). A number of recent U.K. developments, however, are likely to be material to any U.S. fund manager when deciding how to structure a new U.K. presence or when reconsidering any existing U.K. arrangements. In a guest article, Sidley Austin partner Will Smith examines the history of these structures, recent developments impacting their utility and considerations for managers converting from an LLP to an LTD. For additional insight from Smith, see our two-part series on the effect of recent U.K. legislation criminalizing the facilitation of tax evasion: “U.K. Proposes Legislation to Impose Criminal Liability on Companies and Partnerships Whose Employees and Other Agents Facilitate Tax Evasion” (Feb. 23, 2017); and “How U.S. Private Fund Managers May Avoid Running Afoul of Proposed U.K. Legislation Criminalizing the Facilitation of Tax Evasion” (Mar. 2, 2017); as well as our two-part series entitled “U.K. Disguised Fee Rules May Result in Increased U.K. Taxation of Investment Fees to Individuals Affiliated With Hedge Fund Managers”: Part One (Apr. 16, 2015); and Part Two (Apr. 23, 2015).