Salaried members legislation applied to some managers

The taxpayer a limited liability partnership (LLP) provided investment management services as well as back office services.

Members’ remuneration included discretionary allocations which were determined according to their own performance and that of the overall business.

HMRC considered that the salaried members legislation in ITTOIA 2005 s 863A to G applied so that the members would be treated as if they were employees of the LLP for income tax and National Insurance purposes. The LLP would be responsible for deducting PAYE and National Insurance.

Among the conditions for the salaried members rules to apply to a member of an LLP are that at least 80% of the amount paid by the LLP to the member is disguised salary and the member does not have significant influence over the affairs of the LLP.

The taxpayer said neither condition was met and appealed against HMRC’s determinations.

On the 80% condition the...