Nature of membership of limited liability partnership

In November 2011 the taxpayer entered into an arrangement with HW Limited Liability Partnership (LLP) to become a fixed income member of the partnership. He had some voting rights 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 considered the income from HW to be self-employment and therefore liable to National Insurance on those payments. The First-tier Tribunal dismissed his appeal.

The issue concerned the taxpayer’s liability to class 4 contributions - the test for liability in this respect was SSCBA 1992 s 15(3A). The taxpayer claimed the First-tier Tribunal had been wrong to...