Significant influence test should be narrowly construed

Bluecrest was a limited liability partnership (LLP) which managed investment funds and provided support services to other group entities. 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).

These rules contain three conditions targeted at disguised employment and members must meet all three for the rules to apply. 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 all members of the LLP met condition A but only some met condition...