31st October 2022
Nick Bustin, Partner, and Dinesh Pancholi, Senior Manager, recently contributed an article to IFA Magazine on how Limited Liability Partnerships (LLPs) can remain compliant with HMRC in light of the BlueCrest Capital Management LLP case.
The First Tier Tribunal (FTT) ruling on the BlueCrest Capital Management (UK) LLP v HMRC case earlier this year highlights a growing concern that some firms may be misusing their LLP status. The misuse arises from the possibility that some individual members have minimal input in the daily running of the LLP, making them closer to employees (disguised employees) and thereby avoiding Class 1 National Insurance (NI).
The FTT judgment is prompting businesses to revisit their paperwork to ensure they are compliant with rules for LLPs. After all, £55 million in employer’s national insurance is at stake. So, what does this mean for IFAs who set up as LLPs and how can they ensure full compliance with the rules? See some tips below:
- Schedule regular reviews of conditions for LLPs to ensure changes do not affect your status.
- Expect more compliance checks from HMRC.
- Identify your ‘disguised employees’ using HMRC’s Salaried Members Rule (SMR).
Read Nick and Dinesh’s insights in more detail in the full IFA Magazine article here.
There are many benefits to limited liability partnerships but also much to bear in mind. If you would like advice on how to keep your LLP compliant with HMRC, contact Nick or Dinesh, or get in touch with a member of the employment tax team.