Optimising the tax regime is important for all businesses. One of the advantages of partnership is that partners (or members of an LLP) are treated as self employed (Schedule D) by HM Revenue & Customs. This means that partners only pay tax once unlike in a limited company where profits are taxed for Corporation Tax and then directors are paid as employees and under PAYE the profits are taxed a second time. Shareholder directors can take dividends instead of salary but these are still taxed and the 2009 budget has moved against the lower tax rates that dividends used to attract.
Conversion from a general partnership to an LLP is usually tax neutral.
There are special rules for Investment LLPs, which are LLPs formed purely to invest and take income from that investment, rather than to derive income from trading.
An LLP is a separate entity for tax when it comes to VAT and is registerable for VAT if it meets the usual VAT requirements.