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Fixed share partners are not employees, CoA rules

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.

2-Feb-2012

3:08 pm