The LLPSS is a massive relief to the LLP’s that had defaulted in filing the LLP Agreement or Non Filing of LLP Annual Return to ROC. Under the LLP Settlement Scheme, an LLP can file all its pending returns to ROC up to 31st December 2020 without any penalty or additional fee. The LLP Settlement Scheme 2020, gives a one time opportunity to all the defaulting LLP to file their pending returns, documents etc. to ROC without any additional fee or penalty.
The first step to avail the LLP Settlement Scheme (LLPSS) is to do a due diligence of your LLP and make a list of pending returns to the ROC. You can also file the LLP agreement in LLP Form 3 if you missed it at the time of LLP incorporation. The New LLP Settlement Scheme is effective from 1st April 2020 and shall continue until 31st December 2020.
Reasons and Object of LLP Settlement Scheme
As discussed for the reason of non-filing of the required returns by defaulting LLP several LLP has remained non-compliant resulting in the following adverse consequences, which is precisely why the LLP Settlement Scheme 2020 has been announced.
ROC Records Updation : The ROC records of the LLP are open for inspection by the stakeholders on payment of the prescribed fee, however as the LLP did not file requisite forms the records of the LLP are not updated and hence not available for inspection by the stakeholders.
Avoid Criminal Prosecution of Partners : Due to non-filing of LLP Form to the ROC the designated partners are liable for criminal prosecution. Under this scheme the designated partners of defaulting partners are granted immunity from prosecution.
So that the inactive LLP is able to Close: As several LLP did not file Form 3 and annual returns in form 11 and form 8, the LLP can not be closed as it is a prerequisite before the LLP goes for liquidation or winding up. Under this scheme the expectation from the inactive LLP is to file all the pending forms/returns and then close if required.
Benefits & Applicability of the LLP Settlement Scheme 2020
The scheme to give much-needed relief to a large number of defaulting LLP which has not filed the requisite forms
Effective Date (1st April to 30 Sep 2020) : The Revised LLP Settlement Scheme 2020 is effective from 1st April 2020 and shall be open for filing of all the old and pending forms upto 30th September 2020. The original scheme has been revised to extend the date and benefits.
Applicability (All Pending Forms and Returns) : The Scheme is applicable to all defaulting LLP for the forms which were due for filing until 31st August 2020. In simple words, it is available for filing Form 11 and Form 8 for the financial years up to 2018-19, however for the LLP Form 3 and 4 all forms which are due until 31 August 2020 can be filed under this scheme.
Benefit (100% Late Fee Waiver) : The most important benefit of the LLP Settlement Scheme 2020 is that it gives you complete waiver of additional fee and there is no penalty on filing of any LLP Return whatsoever. This scheme is a replica to the Companies Fresh Start Scheme 2020 for the Limited Liability Partnerships.
Immunity from Prosecution : The defaulter LLP and its partners are liable for criminal prosecution for non-filing of required forms and returns under the LLP Act, However, if the defaulting LLP files all the pending returns before 30th September 2020, they shall be entitled to immunity from prosecution in respect of the documents or forms they file under this scheme.