BLP BUSINESS LAW + PRACTICE EXAM
2026/2027 WITH ACTUAL CORRECT
QUESTIONS AND VERIFIED DETAILED
ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST |BRAND NEW
VERSION|JUST RELEASED!!
What does s 4(1) CA 2006 say about private companies?
A private company is any company that is not a public company.
What are the three types of private companies?
Limited by shares
Limited by guarantee
Unlimited
What is a company limited by shares?
A company where members hold shares; no minimum share capital required; shares cannot be
offered to the public
What is a company limited by guarantee?
Members guarantee to contribute a set amount (e.g. £1) if the company is wound up — no
shares involved.
What is an unlimited company?
A rare type where members' liability is unlimited.
What does s 4(2) CA 2006 say about public companies?
A public company is one whose certificate of incorporation states it is a public company.
1|Page
,What suffix must a public company's name include?
"Public limited company" or "plc" (s 58(1) CA 2006)
What is the main practical difference between public and private companies?
Only public companies can generally offer shares to the public and access wider investment
pools.
What additional obligations do public companies face?
More onerous regulatory and disclosure requirements.
What are the key characteristics of companies?
Costs: Legal and incorporation fees
Risk: Shareholders’ liability limited to unpaid share amounts
Structure: Separate legal entity — owns property, contracts, sues/is sued
Formalities: Governed by CA 2006, must register at Companies House
Privacy: Required filings and disclosures, burdensome for small companies
Finance: Preferred by lenders; can issue shares and offer more security
Why is tax an important consideration when forming a business?
Because the amount of tax payable on profits depends on the chosen business structure.
Should commercial lawyers give detailed tax advice?
No — they should be aware of tax implications but refer clients to tax lawyers or accountants.
Is a sole trader's business a separate legal entity?
No — the business is not separate from the individual.
How are profits taxed for sole traders?
As the individual's income for income tax purposes.
2|Page
,How are one-off gains taxed for sole traders?
As capital gains tax on the individual.
Is a partnership a separate legal entity for tax purposes?
No — HMRC looks through the partnership to tax individual partners.
How are partners in a partnership taxed?
On their individual share of profits and gains — as income tax or capital gains tax
Is an LLP treated as a separate entity for tax purposes?
No — although it is a separate legal entity for liability and company law, it is tax-transparent like
a partnership.
How are LLP members taxed?
As individuals — each pays income tax on their share of the LLP's profits and gains
What makes an LLP a hybrid entity?
It combines the procedural flexibility of a partnership with the limited liability and legal
personality of a company.
What is the legal status of a company in relation to its owners
A company is a separate legal entity from its owners (shareholders/members).
What tax do companies pay on their profits?
Corporation tax.
What makes up a company's taxable total profits (TTP)?
Income profits + capital gains
Who is liable to pay corporation tax?
The company itself.
3|Page
, At what rate is TTP taxed?
At a flat rate for the current tax year
What is meant by "double taxation" in the context of companies?
Profits are taxed twice:
The company pays corporation tax on its profits.
Shareholders pay income tax on dividends received from those profits.
Why is double taxation relevant when deciding whether to incorporate?
Because incorporation may result in profits being taxed at both the company and individual
level, affecting overall tax efficiency.
How does s.4(1) CA 2006 define a private company?
A private company is any company that is not a public company.
What is the most common type of private company?
A private company limited by shares.
What is a private company limited by guarantee?
A company with no share capital where members' liability is limited to the amount they agree
to contribute on winding up.
How common are private companies limited by guarantee?
They are relatively rare.
What is an unlimited company?
A company where members' liability is unlimited.
How does s.4(2) CA 2006 define a public company?
A public company is one whose certificate of incorporation states that it is a public company.
4|Page
2026/2027 WITH ACTUAL CORRECT
QUESTIONS AND VERIFIED DETAILED
ANSWERS |CURRENTLY TESTING
QUESTIONS AND SOLUTIONS|ALREADY
GRADED A+|NEWEST |BRAND NEW
VERSION|JUST RELEASED!!
What does s 4(1) CA 2006 say about private companies?
A private company is any company that is not a public company.
What are the three types of private companies?
Limited by shares
Limited by guarantee
Unlimited
What is a company limited by shares?
A company where members hold shares; no minimum share capital required; shares cannot be
offered to the public
What is a company limited by guarantee?
Members guarantee to contribute a set amount (e.g. £1) if the company is wound up — no
shares involved.
What is an unlimited company?
A rare type where members' liability is unlimited.
What does s 4(2) CA 2006 say about public companies?
A public company is one whose certificate of incorporation states it is a public company.
1|Page
,What suffix must a public company's name include?
"Public limited company" or "plc" (s 58(1) CA 2006)
What is the main practical difference between public and private companies?
Only public companies can generally offer shares to the public and access wider investment
pools.
What additional obligations do public companies face?
More onerous regulatory and disclosure requirements.
What are the key characteristics of companies?
Costs: Legal and incorporation fees
Risk: Shareholders’ liability limited to unpaid share amounts
Structure: Separate legal entity — owns property, contracts, sues/is sued
Formalities: Governed by CA 2006, must register at Companies House
Privacy: Required filings and disclosures, burdensome for small companies
Finance: Preferred by lenders; can issue shares and offer more security
Why is tax an important consideration when forming a business?
Because the amount of tax payable on profits depends on the chosen business structure.
Should commercial lawyers give detailed tax advice?
No — they should be aware of tax implications but refer clients to tax lawyers or accountants.
Is a sole trader's business a separate legal entity?
No — the business is not separate from the individual.
How are profits taxed for sole traders?
As the individual's income for income tax purposes.
2|Page
,How are one-off gains taxed for sole traders?
As capital gains tax on the individual.
Is a partnership a separate legal entity for tax purposes?
No — HMRC looks through the partnership to tax individual partners.
How are partners in a partnership taxed?
On their individual share of profits and gains — as income tax or capital gains tax
Is an LLP treated as a separate entity for tax purposes?
No — although it is a separate legal entity for liability and company law, it is tax-transparent like
a partnership.
How are LLP members taxed?
As individuals — each pays income tax on their share of the LLP's profits and gains
What makes an LLP a hybrid entity?
It combines the procedural flexibility of a partnership with the limited liability and legal
personality of a company.
What is the legal status of a company in relation to its owners
A company is a separate legal entity from its owners (shareholders/members).
What tax do companies pay on their profits?
Corporation tax.
What makes up a company's taxable total profits (TTP)?
Income profits + capital gains
Who is liable to pay corporation tax?
The company itself.
3|Page
, At what rate is TTP taxed?
At a flat rate for the current tax year
What is meant by "double taxation" in the context of companies?
Profits are taxed twice:
The company pays corporation tax on its profits.
Shareholders pay income tax on dividends received from those profits.
Why is double taxation relevant when deciding whether to incorporate?
Because incorporation may result in profits being taxed at both the company and individual
level, affecting overall tax efficiency.
How does s.4(1) CA 2006 define a private company?
A private company is any company that is not a public company.
What is the most common type of private company?
A private company limited by shares.
What is a private company limited by guarantee?
A company with no share capital where members' liability is limited to the amount they agree
to contribute on winding up.
How common are private companies limited by guarantee?
They are relatively rare.
What is an unlimited company?
A company where members' liability is unlimited.
How does s.4(2) CA 2006 define a public company?
A public company is one whose certificate of incorporation states that it is a public company.
4|Page
