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Member of LLP couldn’t also be its employee

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Wilson argued that he was an employee of Haines Watts LLP, and so was not liable to class 2 and 4 NIC, which HMRC assessed in respect of payments he received from the LLP.

5th Feb 2021
Tax Writer
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Peter Wilson had been a partner at several accounting firms and has a PhD in tax law. He joined Haines Watts in November 2011 to develop their international tax department. He left in March 2014. 

On joining Haines Watts, he signed an LLP agreement, a deed of variation, and received a side letter that further varied the LLP agreement (collectively the “November documents”).

Self-assessment returns

In his 2011/12 and 2012/13 tax returns, Wilson recorded the income he received from Haines Watts as profit from a partnership. In his 2011/12 return, he claimed a deduction of £9,562 against his partnership share of profits. Wilson knew at the time of submitting that tax return that he would not have been able to claim the deduction as an employee.

In his 2013/14 return, he declared employment income from Haines Watts and provided a disclosure note stating that he believed that he was an employee of Haines Watts in that tax year although he was a fixed income member. The same note also stated that he believed he was an employee of Haines Watts for tax purposes in 2011/12 and 2012/13.

The November documents

The FTT placed greater weight on the November documents themselves and reduced the weight given to Wilson’s evidence, finding it to be unreliable regards the deal struck with Haines Watts about his pay

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By Justin Bryant
08th Feb 2021 09:55

Reminded me of this case about a tax consultant at BTG Tax LLP who was treated as an LLP member for tax purposes despite not being an actual LLP member.

https://www.bailii.org/uk/cases/UKFTT/TC/2019/TC07118.html

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