{"id":5577,"date":"2026-07-14T17:28:17","date_gmt":"2026-07-14T16:28:17","guid":{"rendered":"https:\/\/www.goodmanjones.com\/blog\/?p=5577"},"modified":"2026-07-14T17:28:17","modified_gmt":"2026-07-14T16:28:17","slug":"tax-in-llps-and-partnership-models","status":"publish","type":"post","link":"https:\/\/www.goodmanjones.com\/blog\/tax-in-llps-and-partnership-models\/","title":{"rendered":"Beyond Tax: Why the\u202fBlueCrest\u202fJudgment Could Reshape Modern Partnership Models"},"content":{"rendered":"

Author: Alison Hayden<\/strong><\/p>\n

The Supreme Court has ruled that most of the LLP members of\u00a0BlueCrest\u00a0LLP should be treated as employees, rather than\u00a0self employed\u00a0partners. This has brought the legal rights and duties of LLP members into the spotlight once again.\u00a0<\/span>\u00a0<\/span><\/p>\n

The court has placed a higher importance on the\u00a0<\/span>statutory<\/span><\/i><\/b>\u00a0definition of an LLP member as detailed in the LLP agreement.<\/span>\u00a0<\/span><\/p>\n

It\u00a0has\u00a0also\u00a0brought one of the defining questions of modern professional services firms sharply into focus:\u202f<\/span>what does it really mean to be a partner?<\/span><\/b>\u202f<\/span>\u00a0<\/span><\/p>\n

Do the LLP members have significant influence over the affairs of the LLP in a practical and commercial sense \u2018in the real world\u2019? In my opinion the crux of this question is: Are they business owners? Are they involved in the wider strategy and managerial roles of the business in which they are sharing in the profits or losses? And can this be documented within the governance structure of the LLP?<\/span>\u00a0<\/span><\/p>\n

But how did we get here?<\/span>\u00a0<\/span><\/p>\n

The Evolution of the LLP<\/span><\/b>\u00a0<\/span><\/h3>\n

To understand why this matters, it is worth remembering why LLPs became so popular in the first place, following their introduction in the Limited Liability Partnership Act 2000.<\/span>\u00a0<\/span><\/p>\n

One of the main benefits\u00a0centres on\u00a0the corporate separation of liability, which allows individual partners to invest in businesses without the risk of being personally liable for the business debts.<\/span>\u00a0<\/span><\/p>\n

Alongside these commercial benefits came favourable tax treatment, with members\u202fgenerally taxed\u202fon a self-employed basis.\u00a0<\/span>Prior to the salaried member rules\u00a0being\u00a0introduced in 2014, this term had a looser definition and in some cases was open to abuse.<\/span>\u00a0<\/span><\/p>\n

An example of this abuse was the case of Christopher Lunn & Co. A high percentage of all staff across the firm were in fact LLP members, regardless of their job title.\u00a0This was to benefit from the\u00a0vast employer\u2019s\u00a0national insurance savings. Other irregularities and issues within the firm led to an HMRC enquiry. The result of this enquiry was a prison sentence for Mr Lunn and HMRC successfully recovering c. \u00a320 million under an amnesty scheme. \u202f\u202f\u202f<\/span>\u00a0<\/span><\/p>\n

So,\u00a0we see the history of the LLP and perhaps an understanding to the\u00a0introduction of the\u00a02014 salaried member rules;\u00a0in that an LLP member is treated as a salaried member if all three of the following conditions are met:<\/span>\u00a0<\/span><\/p>\n