Membership of limited liability partnership

In November 2011 the taxpayer entered into an arrangement with HW LLP to become a fixed income member of the partnership. He had some voting rights as a member of the partnership but was not permitted to vote on specified matters. In his 2011-12 and 2012-13 tax returns he showed his earnings from HW as profit from the partnership. In his 2013-14 return he declared his earnings as employment income and in the white space said he considered he was an employee of HW and that the returns for the previous two years were incorrect.

HMRC did not agree that the taxpayer was an employee rather than a partner. It considered the income from HW to be self-employment and therefore liable to National Insurance on those payments. The taxpayer appealed.

The taxpayer accepted that he was a member of HW but said he was also employed by the firm. His income...