Jurisdiction(s):
United Kingdom

BlueCrest v HMRC: Court of Appeal (England and Wales) redefines LLP ‘significant influence’ in salaried members rules, fuelling uncertainty and employer NICs exposure; case remitted to FTT

Published on: 31 January 2025

Published by a LexisNexis Tax expert

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Article summary

HMRC v Bluecrest Capital Management (UK) LLP [2025] EWCA Civ 23. What are the practical implications of this case?

This decision is highly consequential and may load considerable extra expense onto investment managers and professional services businesses. Its ultimate reach will not be clear until the FTT re-examines the issues (and any near-inevitable further appeals are resolved), or if the dispute proceeds to the Supreme Court. As a result, numerous professional partnerships remain in prolonged uncertainty about their eventual tax treatment. A great many partnerships depend upon the safe harbours within the salaried members regime to remain outside its ambit. The income tax dimension of those provisions is material yet broadly containable; affected individuals would probably bear a similar tax burden, collected through PAYE rather than self-assessment (and many firms already make income tax reserves in a manner comparable to PAYE). The more pronounced consequence concerns the employer National Insurance contributions (NICs) exposure. In this dispute alone, employer NICs exceeded £50m. A sudden requirement to account for employer NICs across the spectrum of firms that heavily utilise partnership models could prove ruinous. Many will remain unsure of liabilities until all further appeals are finally resolved. The salaried members rules tax...

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