H6. Payments to partners/members

Query whether a member of an LLP can be an employee

 

- "[65] HMRC had not invited the FTT to take that approach. They had argued that the dicta of Lady Hale formed part of the reasoning of the Supreme Court and had the effect of overruling Tiffin. In contrast, Mr Wilson had argued that the dicta did not form part of the reasoning of the Supreme Court and therefore Tiffin was binding and the FTT was required to follow the reasoning of Rimer LJ in that case.

[66] Ground 2 on the present appeal essentially involves the same arguments. They are not easy arguments. In Reinhard v Ondra LLP [2015] EWHC 26 at [44] and [45], Warren J left open the question as to whether what was said by Lady Hale formed part of the reasoning of the Supreme Court in Clyde & Co. When he returned to the question in Reinhard v Ondra LLP No 2 [2015] EWHC 1869 at [38] he stated that Lady Hale’s dicta was part of the reasoning in Clyde & Co and that the approach in Tiffin could not stand with that reasoning." (Wilson)

- Finding that individual was a partner rather than employee in Wilson (carrying on business in common with the other Members of the LLP with a view to profit)

 

Legislation: LLP Act 2000, s.4(4)

Cases:

Wilson v. HMRC [2021] UKUT 239 (TCC), Adam Johnson J and Judge Cannan; 

HMRC manuals: 

Commentary: 

See also:

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Employee who becomes partner: amounts earned under bonus scheme whilst employee taxable as employment income

 

- Payment made by virtue of being a member of the LLP who had complied with all the conditions of a scheme open only to employees taxable as employment income (§68).

- Fact that rights under the scheme had not crystallised by the time T became a member has no effect on pre-existing contractual rights (§72)

 

Legislation: 

Cases:

Charles Tyrwhitt LLP v. HMRC [2021] UKUT 165 (TCC); 

HMRC manuals: 

Commentary: 

See also:

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