Fixed share partners are not employees, CoA rules

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  • It just gets worse!
    In the top firms it takes 10 years, one marriage and a coronary to get to fixed share partner.
    Once you arrive you get to watch those who arrived before 2002 take all the profits whilst you break your back earning them.
    Now you don't even get employment rights.

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  • So where does that leave the employees of the John Lewis partnership, referred to sometimes as "partners".
    Or do they just take a profit share and have no liability to contribute to capital or debts?

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  • To the poster @ 4:14pm, they are partners in name only. They are given contracts of employment, and work for John Lewis PLC.

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  • 1k capital in, yep you're a fixed share partner with no employment rights, no right to know what is really happening in the LLP and no right to hear about dodgy property deals which will expose you to loss when the LLP collapses.
    Welcome to the partnership

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  • some facts that were no recorded in the Cof A Judgement.
    when the LLP was formed in the 2 may 2007,there were 19 members defined as "Full Equity Partners(FEP)". They contributed 150K each. They held between them 1900 voting points. There were 11 members defined as "Fixed Share Partners ( "FSP)"" . The 9 FSP with 5 points contributed 6.25K each and the two with 10 points contributed 12.5K. In total the 11 FSP's contributed just over 80K. The FSP held 65 votes. There were no members who fell within the definition of salaried partners. They arrived later and were previously solicitors with between 3-6 years PQE. Under a LLP structure all members , even salaried members are treated by HMRC as self employed. As a LLP is a tax transparent structure it is an very useful vehicle to avoid paying employer NI. That is one of the reasons why there are now 40,000 LLP's registered at companies house.The decision means that the LLP structure is now an excellent way to avoid employment rights as well as avoiding employer NI at 12.8%.

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  • was permission to appeal sought?

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  • Does the avoidance of employment rights as well as avoiding employer NI include the rights of a secretary, fee earner, receptionist. So will no one have employment contracts now?

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  • Permission to the SC was not sought.
    In terms of avoiding Employer NI and employment rights , my view is that the LLP structure is a good way to avoid both. As the Court of Appeal has stated there is no need for a person to share profit, contribute capital or having a role in management/businsess decisions of the LLP in order to become a "partner" in the LLP. In my case I did share profits, contribute capital and could vote on certain things. There are no minimum levels. Arguably if you give a person a token jesture for each then you can achieve avoidance of employment rights and employer NI liability. Whether you make more junior people members of the LLP to avoid such liabilities is of course depenant on how far you are prepared to run the risk of a future challenge. But as the law stands today I have heard some say there is no reason why you can not make junior people members of the LLP, asks then to contribute a nominal £100 to the capital of the firm and make 1% of their salary contingent on the firm making a profit. As for voting rights give them say 5 points out of a possible 2000 . It will be interesting to see how far businesses will seek to stretch the rules. The incentive to do so will no doubt be great especially in the current climate. HMRC will no doubt wake up when the tax leakage gets too great.

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  • So where does it leave you if you were called "fixed share" but made no capital contribution received the same drawings/salary each month whether you billed 1k per month or 100k per month ie no risk or reward and had absolutely no say in the running of the practice, there were only ever full equity partners meetings no other partners ever involved??

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  • I was forced to sign an LLP contract or I would not have gotten my job. I work in HR and payroll, my salary slip each month calls my basic pay "Profit Share", however, I have a set salary which was agreed before I started working and as with any normal job they deduct tax and national insurance from my salary. I am being bullied at work and have tried to resolve it by talking to the HR director. It is still happening. I feel forced to resign which I believe is constructive dismissal, but it looks like I have no employment rights. can anyone help please. thak you

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