b'Limited Liability Partnerships (LLPs) 4.2 LLPs are not permitted to be used as local authority trading vehicles even though LLPs would assist the authority to maintain its favourable tax treatment and is the vehicle of choice for many professional trading partnerships (such as law firms) outside of the public sector. The decision to omit LLPs from the list of possible trading vehicles under the relevant legislation was deliberate and designed to prevent local authorities benefiting from a generally favourable tax treatment when participating through a trading vehicle in a competitive market.For many years local authorities (and those advising them) have faced uncertainty as to whether legal powers exist to permit local authorities to set up or participate in LLPs for purposes other than trading. Peters v Haringey LBC and Lendlease Europe Holdings [2018] EWHC 192 (Admin) (the Haringey case) now provides much needed clarity to this difficult local authority vires (powers) issue. As a result, local authorities may wish to either revisit or more fully consider what a LLP might offer over more conventional partnership vehicles, such as companies, where trading (or more precisely acting for a commercial purpose) is not the prime objective. Rob Hanns Local Authority Companies and Partnerships contains further material on this important case and its implications for local authorities seeking to establish vehicles for purposes other than trading.In briefthe Haringey case hinged on the fact the council was purporting to rely on section 1 of the Localism Act 2011 (powers of general competence), but which required the use of a company (not a LLP) where the council was acting in pursuance of a commercial purpose (section 4 of the 2011 Act). Mr Justice Ouseley, hearing the judicial review application, decided that section 1 of the 2011 Act had provided local authorities with a significantly wider range of powers than they previously had and was not confined to enlarging authorities powers simply so that they could do things with a commercial purpose (although it clearly does enable them to do things for a commercial purpose). Commercial purpose includes trading and money-making activities which previously local authorities could not undertake and these activities may put them in competition with the private sector, large or small. The requirement for those activities done for a commercial purpose, only to be carried out by a company, prevents the local authority being in a more favourable position in relation to taxes than those with whom it is newly enabled to compete. Crucially, Mr Justice Ouseley did not think Parliament had intended that doing things which might generate a profit or return for the council related to its land assets, which the council could then use for its functions, should now only lawfully be done through a company. The judge stated: To my mind, there is no doubt that the councils purpose in entering into the arrangements setting up the HDV and governing its operation . cannot be characterised as a commercial purpose within the scope of the Localism Act. Even more clearly is its dominant purpose is not commercial. Any commercial component is merely incidental or ancillary, and not a separate purpose.51'