The UK Supreme Court on July 1 unanimously dismissed BlueCrest Capital Management (UK) LLP’s appeal in its dispute with HM Revenue & Customs over the tax treatment of senior members under the salaried members rules for limited liability partnerships, leaving the firm facing about £200 million of liabilities for the 2014 to 2019 tax years.
The judgment covers approximately £142 million of PAYE determinations and about £55.3 million of Class 1 National Insurance contributions. The court held that most of the remuneration in question met the test for disguised salary.
The court also said the lower tribunal had erred in finding that certain investment manager members had significant influence over the affairs of the partnership. It said the relevant question is whether a member’s legally enforceable rights and duties under the LLP agreement give that member commercially substantive influence over the affairs of the partnership as a whole.
The judgment said informal influence based on performance, personal relationships or other non-contractual factors is not relevant. Condition C, which relates to capital contribution, was not in dispute. BlueCrest said after the ruling that the decision affected its assessment of the UK as a location for business activity.