The Supreme Court heard BlueCrest in January 2026 and judgment is now expected imminently (or following summer recess). Uncertainty remains over the interpretation of the salaried members rules, particularly Condition B – whether a Limited Liability Partnership (LLP) member has 'significant influence’ over the affairs of the firm.
The outcome will be significant for professional partnerships operating through LLPs where senior members rely on Condition B to support self‑employed tax treatment.
Background – how we got here
The salaried members rules are intended to prevent individual members of a UK LLP who are, in substance, employees from being taxed as self-employed partners. BlueCrest has become a leading test case because it considers how those rules should apply in complex partnership structures.
Earlier tribunal decisions adopted a relatively broad, practical interpretation of ’significant influence’, taking account of how influence operates in reality. More recently, the Court of Appeal was clear that only influence deriving from legally enforceable rights and duties of the members should be taken into account in assessing ‘significant influence’, not de facto influence arising from other arrangements (see our prior article which includes a summary of the salaried member conditions). The Supreme Court is now considering whether, and to what extent, that approach is correct.
As a result, the case remains of close interest to HMRC and professional partnerships alike.
Current position
- The Supreme Court hearing took place in January 2026.
- Judgment has not yet been released.
Until the Supreme Court’s decision is issued, uncertainty remains as to how HMRC’s approach to the salaried members rules may develop. Our briefing with Oliver Marre (Counsel for BlueCrest at the First-tier Tribunal, Upper Tribunal and Court of Appeal hearings) discusses the Supreme Court hearing.
What partnerships may wish to consider now
While awaiting the judgment, partnership leadership teams should reflect on the following areas:
- Governance and influence - Consider whether senior members’ influence is clearly underpinned by formal, legally enforceable rights, such as voting rights, reserved matters or defined management roles, rather than relying primarily on custom and practice;
- Review of salaried member analyses - Existing positions that place significant reliance on Condition B may benefit from reassessment, particularly where they assume a broad interpretation of ‘significant influence’;
- Use of the interim period - Some firms are using this period to review partnership agreements and governance frameworks to ensure that documentation accurately reflects how decision‑making occurs in practice. Where changes are being considered ahead of the judgment, firms should also be mindful of the potential application of the targeted anti‑avoidance rule (TAAR);
- Lookback period - A reclassification of members as employees would give rise to NIC liabilities, with HMRC typically able to look back up to six years. This can create a significant cash tax exposure, particularly where multiple members are affected; and
- Document historic positions - Undertake a year‑by‑year, member‑by‑member analysis of salaried member status, documenting the basis for conclusions reached. This can be important both to support the technical position taken and to mitigate potential penalties in the event of HMRC challenge.
Looking ahead
The Supreme Court’s judgment will be an important development for LLPs. Depending on the outcome, it may confirm or adjust the Court of Appeal’s approach to Condition B, with potential implications, including significant back taxes and for governance, capital and reward structures across professional partnerships.
Salaried member risk remains an inherent feature of LLP structures, and partnership governance is likely to remain an area of ongoing HMRC scrutiny.
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