HMRC v BlueCrest Capital Management (UK) LLP UKSC 18

J J DOSHI

Tax Adviser

On 1 July 2026, the UK Supreme Court handed down judgment in Commissioners for HMRC v BlueCrest Capital Management (UK) LLP UKSC 18, unanimously dismissing BlueCrest’s appeal and confirming HMRC’s position on the tax treatment of certain LLP members as “salaried members”. BlueCrest is a prominent hedge fund group whose UK LLP engaged both portfolio managers and back-office professionals as members, with profit-linked remuneration. HMRC argued that many of these individuals were, in substance, more akin to employees than true equity partners, and should therefore be brought within the salaried members regime, with PAYE and NIC applied to their income. The case focused on two key statutory conditions:

• Condition A: whether the variable remuneration was “disguised salary”.
• Condition B: whether the members had “significant influence” over the affairs of the LLP.

Both tribunals and the Court of Appeal held that the BlueCrest members’ profit-related returns constituted disguised salary for Condition A. The real controversy – and the issue that ultimately reached the Supreme Court – was the proper interpretation of “significant influence” under Condition B. The Supreme Court endorsed the Court of Appeal’s narrow interpretation of “significant influence”. In particular:

• Significant influence must arise from the LLP’s constitutional and contractual framework (for example, the LLP agreement), not merely from day-to-day operational responsibilities or influence over investment decisions.
• The influence must be exerted over the affairs of the partnership “viewed as a whole”, rather than confined to a particular desk, book or function.

Although BlueCrest’s members carried substantial responsibility for investment strategy and performance, the Court found that their role in the governance of the LLP itself was limited. Their rights in relation to capital, voting, and strategic direction did not amount to the level of partnership-wide influence contemplated by Condition B. On that basis, the Court concluded that the affected members fell within the salaried members rules, and HMRC’s assessment of PAYE and NIC liabilities – close to £200m – was upheld. This judgment has immediate and wide-ranging implications for LLPs in asset management, professional services and other sectors that rely heavily on profit-participating members. The BlueCrest decision marks the first Supreme Court authority on the salaried members rules and sets a clear, restrictively interpreted benchmark for “significant influence”.

For advisers and LLPs, it reinforces that substance – particularly governance substance – will trump labels in determining whether an individual is truly a partner or, in tax terms, a highly paid employee.

Law
Limited Liability Partnership
Court
HM Revenue And Customs
BlueCrest Capital Management

J J DOSHI

Tax Adviser

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