LLP members: partners or employees? Bluecrest ruling moves the goalposts

31 October 2023

The eagerly awaited decision of the Upper Tribunal (UT) in Bluecrest was released on 18 September 2023, confirming that the approach adopted by the First Tier Tribunal (FTT) to the application of Conditions A and B of the ‘salaried members’ rules was correct in law. 

Whilst the decision on Condition A (‘disguised salary’) in HMRC’s favour is relatively uncontroversial, the decision on Condition B in Bluecrest’s favour broadens the meaning of ‘significant influence over the affairs of the partnership’ beyond the restrictive interpretation taken by HMRC to date.

This will be a welcome development for Limited Liability Partnerships (LLPs) with members who may sit on the borderline of falling in or out of the rules. The UT emphasised, however, that the facts of the particular case need to be considered in order to determine whether members have significant influence or not. The evidential burden remains with the taxpayer and undertaking a detailed analysis of the application of the rules on a case-by-case basis remains as important as ever.

LLPs would be well advised to revisit their salaried member analysis and ensure that the status is monitored on an ongoing basis. The Bluecrest decision presents an oportunity to reassess Condition B, as well as the members’ capital requirements where failing Condition C has been relied upon to date, but caution should be exercised before making any changes.

You can read our analysis of the case and its potential implications in the attached briefing but, if you want to discuss your firm’s own position, please don’t hesitate to get in touch. 


To discuss how we can help your partnership, please contact Jitendra Patel, or your usual BDO contact.

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