UK Supreme Court rejects investment manager’s appeal against tax treatment of LLP members
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The UK Supreme Court has dismissed an appeal by a London investment management firm against HMRC’s decision to treat most of its LLP members as employees for tax and national insurance purposes under the “salaried members” rules, potentially leaving it with a tax bill of around £200 million.
The court rejected the firm’s arguments on the interpretation of the legislation, ruling that remuneration linked to individual or team performance rather than the LLP’s overall profits could still fall within the salaried members regime. However, it upheld the Court of Appeal’s decision to remit one aspect of the case to the First-tier Tribunal to reconsider whether certain members exercised “significant influence” over the partnership.
The judgment provides important guidance on the scope of the Finance Act 2014 provisions, which were introduced to tackle “disguised employment” through LLP structures while preserving more favourable tax treatment for genuine partners.
Our sister publication, Scottish Legal News, has the full summary.
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