BlueCrest Capital Management, the family office-turned-hedge fund founded by billionaire financier Michael Platt, is set to face HM Revenue & Customs (HMRC) at the UK Supreme Court this week in a high-profile tax dispute that could have wide-ranging implications for the asset management industry, according to a report by CityAM.
The case centres on the application of the UK’s salaried members’ rules, which determine whether members of limited liability partnerships (LLPs) should be treated as genuinely self-employed or classified as “disguised employees” for tax purposes.
HMRC has issued determinations covering the 2014/15 to 2018/19 tax years, arguing that the majority of BlueCrest’s LLP members — excluding a small number of executive committee figures — should be treated as salaried members. As a result, the tax authority is seeking to recover income tax and national insurance contributions that could total close to £200m if BlueCrest ultimately loses the case.
Michael Platt, the UK’s wealthiest financier according to the Sunday Times Rich List, led the firm throughout the period under dispute. Platt, who has been based in the United Arab Emirates, was estimated to have a net worth of £11.5bn in 2023.
The legal battle has been working its way through the courts for several years. In March 2021, the case was first heard by the First-Tier Tribunal (FTT), which delivered a split ruling. The tribunal found that discretionary bonuses linked to individual performance constituted “disguised salary”, but also ruled that BlueCrest portfolio managers exercised “significant influence” over the firm due to the scale of capital they managed.
Both BlueCrest and HMRC appealed that decision to the Upper Tribunal, which largely upheld the FTT’s findings following a hearing in June 2023.
The dispute then progressed to the Court of Appeal, which heard arguments in November 2024. In a setback for BlueCrest, the court overturned elements of the earlier rulings and ordered the case to be reheard by the FTT under a revised and more stringent legal test.
BlueCrest subsequently applied for permission to appeal to the Supreme Court. Although HMRC objected, the application was granted. Industry bodies including the Alternative Investment Management Association (AIMA) and the Managed Funds Association have also been granted permission to intervene, underlining the broader significance of the case for the UK asset management sector.
The Supreme Court is expected to consider whether certain members of BlueCrest LLP should be treated as employees for tax purposes during a two-day hearing beginning on Wednesday. The ruling is likely to be closely watched by hedge funds and alternative asset managers structured as LLPs, given its potential impact on partner remuneration and tax treatment across the industry.
