HMRC sending tax letters to Brits after Supreme Court ruling
By Google News Personal Finance ·
HMRC is writing to Limited Liability Partnerships (LLP) — a formal business structure that has the operational flexibility of a traditional partnership but with legal protection of limited liability — to check if their members should actually be treated as employees following a Supreme Court ruling.
Judges issued their judgement over HMRC v BlueCrest Capital Management (UK) LLP on July 1, concluding that BlueCrest’s traders were paid based on their own results, and the firm’s total profit just acted as a ceiling.
The court said this counts as salary-type pay, and being paid on an employee's own performance is not the same thing as sharing in a company's overall profits. The Government says LLPs should check if: their members’ pay depends on the firm’s overall profits, their formal rights in the LLP agreement give them a real say in running the firm and they have put in enough of their own personal funds.
Adam Craggs, Partner, Head of Tax, Investigations & Financial Crime and Liam McKay, Of Counsel at RPC Legal wrote in a blog post: "The BlueCrest judgment sets a demanding standard for LLPs seeking to establish that their members are genuinely self-employed.
"With HMRC now actively reviewing LLPs, firms should not assume that historical treatment will continue to be accepted. The terms of the LLP agreement, the actual remuneration arrangements and the formal rights of members should all be reviewed carefully.
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"Where an LLP is already subject to an HMRC compliance check, specialist advice should be taken before responding, particularly where the status of a significant number of members could be affected. The post advised the LLPs should think about carrying out a review of their members’ positions against all three salaried member conditions:
The experts say "HMRC's focus is on whether members who are currently treated as self-employed should instead be treated as employees under the salaried members rules in section 863A-G ITTOIA 2005".
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Originally published by Google News Personal Finance
