Editorial note. This Case Note is a short, plain-English summary and our editorial opinion. It may not capture every issue in the case, may contain errors or become out of date, is not legal advice, and must not be relied upon. Always read the full judgment (linked below) and take advice from a qualified lawyer before acting.

Twelve years after the salaried members legislation was enacted, the Supreme Court has given its final word on the highest-profile case it has produced. In HMRC v BlueCrest Capital Management (UK) LLP [2026] UKSC 18, the Court dismissed BlueCrest's appeal on both of the statutory conditions in issue — leaving the hedge fund facing PAYE determinations of approximately £142m, plus National Insurance, for the 2014–2019 tax years.

What the case was about

The salaried members legislation (sections 863A–863G of ITTOIA 2005, inserted by the Finance Act 2014) treats a member of an LLP as an employee for income tax and NICs if three conditions are all met: broadly, that their pay is “disguised salary” (Condition A), that they lack “significant influence” over the affairs of the LLP (Condition B), and that they have not contributed meaningful capital (Condition C). Fail any one condition and the member remains taxed as a partner.

HMRC decided that all but four members of BlueCrest — the original executive committee — met all three conditions. BlueCrest challenged that view in respect of its portfolio managers and desk heads, arguing their discretionary allocations were linked to profits (defeating Condition A) and that they wielded significant influence over the firm's affairs (defeating Condition B). Condition C was conceded to be met throughout.

What the Supreme Court decided

In a joint judgment of Lord Richards and Lady Simler (with whom Lords Briggs, Hamblen and Burrows agreed), the Court dismissed BlueCrest's appeal on both Condition A and Condition B (para 135). On Condition A, the discretionary allocations paid to portfolio managers and desk heads were “disguised salary”: the Court rejected as “so divorced from the purpose” of the provision a literal reading under which pay influenced by a manager's own performance could be said to vary by reference to the overall profits of the LLP. The Court also observed that the three conditions deliberately echo the strong indicators of traditional partnership status at common law (para 64).

On Condition B, the Court upheld the narrower construction of “significant influence over the affairs of the partnership” adopted by the Court of Appeal, and confirmed that the question whether any individual members actually satisfy Condition B on that construction will be remitted to the First-tier Tribunal on the existing evidence (paras 136–137).

Why it matters

  • Asset managers and large professional LLPs are squarely in scope. The industry stakes were plain: the Alternative Investment Management Association and the Managed Funds Association intervened. Members whose reward tracks their own book rather than firm-wide profits should assume Condition A is met.
  • “Significant influence” is a high bar. Influence over your own desk or team is not influence over the affairs of the partnership. LLPs that relied on a wide reading of Condition B after the earlier tribunal rounds will need to revisit their analysis — and their PAYE exposure.
  • The saga is not quite over. The application of Condition B to individual members now returns to the FTT, so the final allocation of the £142m remains to be worked out.

Explore the underlying law on Search the Law: salaried members and significant influence · disguised salary and LLP taxation.

Read the full judgment: HMRC v BlueCrest Capital Management (UK) LLP [2026] UKSC 18 (The National Archives).