BlueCrest Capital Management has lost its appeal before the UK Supreme Court in a landmark tax dispute over the application of the UK’s salaried members rules, a ruling expected to influence partnership structures across the hedge fund industry, according to the FT.
The court unanimously upheld HM Revenue & Customs’ position that most members of BlueCrest’s limited liability partnership should be treated as employees rather than self-employed partners for tax purposes, resulting in an estimated £200 million liability covering 2014 to 2019.
The case focused on whether LLP members exercised “significant influence” over the firm’s affairs, a key test for qualifying as self-employed partners. The judgment clarifies that the exemption is intended for individuals with genuine strategic influence rather than partner status alone.
BlueCrest criticised the decision, arguing it undermines certainty for businesses relying on HMRC guidance and could affect the UK’s attractiveness as a financial centre.
Industry advisers said the ruling is likely to prompt firms using similar LLP structures to review partner classifications and remuneration arrangements, although many hedge fund managers have already made changes while the case progressed. HMRC said it welcomed the judgment and would consider updating its guidance following the decision.
