The Supreme Court has delivered its judgment in HMRC v BlueCrest, providing important clarification on the LLP salaried member rules. The decision confirms a restrictive approach to “significant influence” and reinforces HMRC’s position on disguised salary. It is likely to have wide implications across fund management and other LLP structures.

The Supreme Court has dismissed BlueCrest’s appeal in HMRC v BlueCrest Capital Management (UK) LLP [2026] UKSC 18, the leading case on the application of the LLP salaried member rules introduced in 2014.

Under those rules, an LLP member is treated as an employee for tax purposes if three statutory conditions (Conditions A, B and C) are all met. Conversely, if any one of those conditions is not met, the member is treated as self-employed.

HMRC assessed BlueCrest for approximately £142 million in PAYE and £55 million in NICs in respect of the 2014–2019 tax years, on the basis that most members met all three conditions.

The Supreme Court upheld the Court of Appeal’s conclusions on both Condition A and the proper interpretation of Condition B. The question of whether Condition B is met in individual cases will now be reconsidered by the First-tier Tribunal applying the correct legal framework.

Condition A: disguised salary confirmed

The Court confirmed a broad interpretation of “disguised salary” for the purposes of Condition A.

In particular, remuneration determined primarily by reference to individual or desk-level performance, even where subject to an overall profit cap, was held to fall within the definition.

The judgment emphasises that Condition A is directed at whether a member’s remuneration reflects a share in the profits of the LLP as a whole, as would be expected in a traditional partnership, rather than performance-related pay more typical of employment.

For fund management structures, where remuneration is often tied to portfolio or desk profitability, this significantly increases the likelihood that Condition A will be met.

Condition B: narrower approach to significant influence

For many LLPs, the immediate significance of BlueCrest is the Supreme Court’s endorsement of a much narrower interpretation of “significant influence” for the purposes of Condition B.

The Court confirmed that influence must derive from legally enforceable rights and duties within the LLP’s constitutional framework and must be exercised over the affairs of the LLP generally, rather than arising from an individual’s commercial importance, revenue generation, investment discretion or standing within the business.

For firms that have historically relied on senior portfolio managers, rainmakers or practice heads as evidence that Condition B is not met, the focus is now likely to shift towards governance arrangements, voting rights, committee structures and the formal allocation of management responsibilities.

The decision makes clear that operational influence or financial contribution, however significant in practice, will not prevent Condition B from being met if those attributes are not grounded in legally enforceable governance rights.

Wider implications beyond fund management

The decision may have consequences well beyond the asset management sector. LLPs across financial services and professional partnerships should revisit their salaried member analyses, remuneration arrangements and constitutional documentation. In practice, the judgment increases the risk that members whose rewards are primarily linked to individual or team performance, rather than the overall profits of the LLP, may meet Condition A and may also meet Condition B, bringing them within the salaried member rules. The financial implications can be significant.