Salaried member rules do not apply to all LLP members

The taxpayer was a registered limited liability partnership (LLP) and provided investment management services to the Bluecrest Group.

HMRC ruled that the taxpayer was liable to pay income tax and National Insurance in respect of LLP members on the basis that the salaried member rules applied to them (ITTOIA 2005 s 863A).

The salaried members rules contain three conditions targeted at disguised employment. However the rules do not apply if a member fails any one of those conditions. The instant case concerned condition A which is met if the member’s remuneration is fixed or variable but without reference to the profits or losses of the partnership and condition B which is met if the member does not have significant influence over the affairs of the LLP.

The First-tier Tribunal allowed the taxpayer’s appeal in part holding that although all members of the LLP met condition A ...